Do you know insurance outsourcing services are growing at pace? According to a recently released survey, the market size of insurance outsourcing was $5.8 billion in 2020. However, the growth projection is at a CAGR of 4.2%and it will be $10.2 billion by 2028.
What’s the reason behind such a dramatic increase? It is challenges that insurers face, which include legal technology adoption, shifts in consumer buying preferences, and changing compliance laws and regulatory requirements.
Outsourcing in the insurance industry is not limited to data entry or call centers. It manages crucial tasks such as policies, commissions, claims processing, accounting, agencies, and brokers. By delegating these processes, insurers save costs on infrastructure, global talent, and modern technologies.
What are the top capabilities you should outsource?
The talent gap in the insurance industry has been taking a toll for years now. The reason is half of the workforce is retiring, and fresh graduates aren’t seeking careers in this industry. However, outsourcing partners can handle several processes across the lifecycle, including:
- New Business Servicing
- Underwriting
- Policy Management
- Policy Checking
- Policy Issuance
- Loss Runs Processing
- Policy Renewals
- Commissions Management
- Claims Management
- Insurance Reporting
However, insurance carriers choose to keep their underwriting process in-house because risk evaluation for new products plays a key role. Insurers can focus on serving customers better and growing profitability with insurance BPO services.
What are the dominating trends in insurance outsourcing?
As the insurance landscape evolves, insurers must adapt their existing operating models and core processes to deliver innovative products.
- Artificial Intelligence
AI’s algorithms are transforming the core processes for insurers. It assists with underwriting and pricing strategies by crafting personalized policies, automating the underwriting process, and providing estimates with greater accuracy. It can combat cyber threats and improve customer loyalty for insurers.
Outsourcing partners leverage AI tools to help you create new business acquisition opportunities, provide better pricing, and increase profitability. It can also assess risk, insurance fraud detection, and reduce human errors. It can also help identify patterns in data that humans may not be able to find, enabling insurers to make informed decisions.
2. Claims Automation
For insurers, everything comes down to claims. Claim processing is an intricate workflow that involves 10-15 checkpoints, depending on the claim type. It is then approved and disbursed. It is crucial because it showcases insurers’ commitment to compensation for clients’ losses.
Insurance carriers are investing in several automated tools to assess the claim and determine whether the policy covers it. These tools analyze the policy language, review damage reports, and consult with third-party databases to verify the claimant’s identity and prior claims history.
Depending on the information gathered during the evaluation and validation stages, insurers can make the right decision for claim disbursement. This is how insurance outsourcing firms can increase efficiency, improve accuracy, and shorten turnaround times.
3. Data Analytics
Insurers have been undergoing digital transformation for years. It has not only increased speed, efficiency, and accuracy but also improved carriers’ bottom line. However, with the advent of data and predictive analytics systems, insurers are able to make data-driven decisions. What’s the impact of data analytics?
- It is creating new opportunities for insurers to optimize every task in the insurance value chain.
- It assists in analyzing customer risk and determining which client is reliable or may cause losses.
- It can detect fraud in claims processing
- It is ideal for customers to find the minimum cost policies and various other offers.
According to a report, 86% of insurance firms are leveraging insurance data analytics for optimum predictions. With data-driven decisions, insurers can predict future trends and risks, reducing costs and making insurance firms more efficient and customer-centric. However, managing databases and retrieving the right information can be an intensive task. By choosing the right outsourcing partner you streamline this process and let the experts represent visual reports for better tracking.
4. Connected Systems
Connected systems are assisting insurance companies to streamline risk coverage to prevention. It alerts insurers and customers during irregularities. Typically, it is not the job of the insurers to perform risk management. Implementing IoT can create a better understanding between customers and the insurance company.
That’s where an outsourcing partner can assist you. With extensive years of industry experience, they can efficiently implement, gather, and store all the data collected from multiple sources. Further, insurers can analyze the data, including client behavior, physical condition, corporate context, and health state.
Bottom Line
These technology trends, in several ways, will transform the insurance industry. It will be a threat for players who won’t adapt. It’s time for insurers to act now and make their processes technology-focused. If you wish to transform your insurance business for sustainable growth, make the right move now.
