Insurance business process outsourcing: What you need to know

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Today, several insurance companies face challenges like strict regulations and economic instability, along with the COVID-19 impact. 

To remain competitive, they may consider insurance business process outsourcing. 

Insurance business process outsourcing is the contracting of certain business processes to an outsourcing company.

In this article, we’ll learn what insurance BPO is, identify the insurance operations you can outsource, and discuss how hiring a business process outsourcing firm can benefit your business. 

Finally, we’ll highlight various insurance BPO models and four popular insurance BPO companies to help you get started quickly.

This article includes:

(Click on the link to go to a particular section)

• What is Insurance Business Process Outsourcing?
• Which Insurance Processes can You Outsource?
• 4 Key Benefits of Outsourcing Insurance Business Processes 
• 3 Insurance Business Process Outsourcing Models 
• 4 Popular Insurance BPO Solutions

Let’s get started.

What is insurance business process outsourcing?

In insurance business process outsourcing, an insurance agency outsources certain business functions to third-party service providers. 

With an insurance BPO, companies can concentrate on core competencies after handing over back office services like:

• Data entry.
• Claims processing.
• New business service.
• Commission management.

The insurance BPO industry is booming due to the growing digitalization and increased demand for high-quality services at a lower cost. 

In fact, the global insurance business process outsourcing market is projected to grow at a Compound Annual Growth Rate (CAGR) of 8.5% during the 2021 to 2028 forecast period. And claims management is expected to account for the largest market share. 

That’s why there’s never been a better time to outsource insurance services. 

Want to understand how BPO works?

Check out our Guide to Business Process Outsourcing to find out everything you need.

Let’s now look at the different services you can outsource to an insurance BPO service provider.

Which insurance processes can you outsource?

Here are some services that the insurance business process outsourcing companies offer:

1. Data processing

Data processing in insurance companies involves collecting and managing customer information from various sources. 

Depending on the type of insurance plan you’re handling, data processing can include:

• For motor vehicle insurance: Vehicle registration number, model, mileage, etc.
• For property insurance: Amount insured, insured object details, insured object value, etc.
• For household insurance: Number of rooms, ownership, the value of household contents, etc.

2. Data mining

Data mining in the insurance industry is the process of finding customer behavior patterns. 

It can help you determine which customer group is more likely to accept an increase in the insurance rate and who is likely to look around for another provider. 

You can then make business decisions based on these observations.

Similarly, an insurance company can identify possible insurance fraud using data mining. The agency can use data mining techniques, and data from past insurance claims to discover patterns that indicate high chances of fraud.

3. IT services

State-of-the-art IT services enable insurance companies to connect with customers effortlessly. It also automates tasks and reduces the amount of paperwork associated with insurance claims, simplifying tasks.

For example, you can employ a company specializing in IT security to provide end-user security training to your team and educate them on protecting sensitive customer data. Such training can help your organization avoid data breaches and cyberattacks.

4. Call center

Call center outsourcing will reinforce your customer retention efforts and help you avoid the costs associated with hiring in-house customer support or sales team. 

An outbound call center can help you enter new markets by approaching potential customers.

For example, your outsourced customer service team can make outbound calls to potential customers and introduce new insurance plans. This way, you can gain new customers.  

Similarly, an inbound call center team can enhance customer experience by guiding customers on insurance plans and services. They can even help upsell or cross sell to existing customers, boosting your sales. 

5. Underwriting

Underwriters assess insurance proposals to determine their feasibility and risks with services such as process management and analytics. 

For example, an insurer who gives motor vehicle loans will need to calculate customer premiums. They can do this by combining behavioral analysis and external factors like road and neighborhood safety to determine the likelihood of an accident or theft. 

Instead of hiring an in-house professional to handle this, insurers can outsource this specialized work for a competitive advantage. 

6. Finance and accounting

An insurance company manages customer risk in return for money. This means that as the company grows, so will the volume of its finance and accounting tasks. 

A good insurance BPO service provider can develop financial strategies to guide investment decisions. It can also streamline end-to-end processes of billing, collections, reconciliation, and application.

Now, let’s see how hiring an insurance BPO will help you.

4 key benefits of outsourcing insurance business processes

Here are some advantages of outsourcing insurance processes to a BPO provider: 

1. Frees up time to focus on core tasks

Performing administrative and back office tasks can keep your team from concentrating on core competencies. This can delay business growth and pull you behind your competitors.

Hiring a BPO company can help your team prioritize important tasks that need attention, while the outsourced service provider handles the lower-order tasks. This way, you and your team can concentrate on delivering high-quality service and achieving company goals.

2. Cost savings

The cost of running your business can also be a lot due to high office rent, electricity charges, and other utilities. Additionally, maintaining a fully-fledged in-house team for each business process can be expensive due to increased labor costs. 

Most outsourcing services are based abroad in countries with low labor and resource charges. And by outsourcing to foreign entities, you can cut operating costs.

Additionally, you may need premium software to complete tasks, which can be expensive. A good outsourcing provider will have the latest software, and you can access these at a cheaper cost, helping you save on software expenses. 

3. Larger talent pool

Acquiring talents from a single geographic location can be hard due to the growing demand for skilled talent in the insurance sector. Moreover, when you’re competing with other global insurance companies, you need the best employees.

Outsourcing services can expand the talent pool and help you recruit the most desirable talents from across the globe. 

For example, let’s say you have a complicated insurance claim, but the claims adjusters in your locality aren’t experienced enough to handle it. In this situation, you can outsource the task to an insurance business BPO provider with an experienced claims adjuster in another part of the world. 

4. Easy scaling

Insurance companies that are gearing to expand their business need to concentrate on developing and executing plans to establish abroad. 

You may find it challenging to scale up with the increasing business demands due to skill or funds shortage. Likewise, you may have to rearrange office space, decrease workforce capacity, etc., if you decide to scale your business down. 

Most outsourcing service providers have multiple clients, and their employees are usually multi-skilled, making it easy to handle scaling. They can quickly increase and decrease the capacity of your outsourced team as you need. 

And ideally, you should outsource services that are outside your team’s expertise.

This way, your outsourced team can complete the business operations that your in-house team isn’t trained to do. You can do this by determining which service you require and outsource it to the right type of insurance BPO.

Want to learn all about outsourcing?

Check out the complete guide to outsourcing for information on everything from sourcing talent to boosting productivity. 

3 insurance business process outsourcing models

Business Process Outsourcing companies are evolving with the insurance market. Consequently, there are different models in the industry depending on the tasks outsourced. 

Here are the top insurance business process outsourcing models:

1. Traditional BPO model

Traditional BPO is when insurance companies outsource only certain tasks to the outsource provider. 

Companies utilize this insurance business process outsourcing model when they can’t meet customer demands due to workforce shortage. 

And remember, BPO is often more affordable when compared to maintaining an in-house team. 

For example, let’s say you’ve recognized a growth opportunity in the healthcare insurance niche. You could outsource tasks like sales, claims management, etc., instead of hiring new in-house employees. 

2. Transactional BPO model

A transactional BPO model is about solving specific issues in the business process and improving workflow, especially when there is a bottleneck in the work process. 

Insurance providers opt to outsource to such insurance business process service providers when they are short of time and can’t expand their management framework to solve the issue. 

The insurance company can discontinue the outsourced service once the insurance business process provider resolves the issue.

For example, let’s say your accountant went on a long leave suddenly during a busy season due to personal reasons. You can outsource accounting processes to a transactional BPO till your accountant returns.

3. Strategic BPO outsourcing model

Strategic outsourcing takes a holistic approach to managing operations. This approach utilizes the company’s strategy, employees, processes, and technology when outsourcing. 

While the other two models aim to solve specific issues within the organization, the strategic model focuses on the organization’s operations as a whole. 

For example, in strategic outsourcing, your BPO will analyze the skill set of your team members and assign roles they excel at. This way, you can maximize employee performance and increase operational efficiency.

Now that you know the different insurance BPO models, let’s look at some insurance BPO tools.

4 popular insurance BPO solutions

Here are some of the top insurance BPO providers you can outsource to:

1. Infosys

Infosys is an insurance business process outsourcing service based in India. The company has over 3000 consultants around the world and branches across 15+ countries.

Infosys mainly focuses on their client’s business process improvement, revenue growth, improving customer experience, and profitability.

Key services

• Helps develop strategies to build, grow, and transform your business.
• Provides different analytics of business, portfolio, product management, and reverse adequacy.
• Helps you increase customer satisfaction by offering specific products that clients need and integrating self-service capabilities.
• Offers technology solutions with the flexibility to adapt to business needs.

2. WNS Global Services

WNS Global Services is an Indian business process management company with clients from different parts of the world. They utilize analytics, operating models, and technologies to improve processes.

Key services

• Offers flexible services to accommodate scope, pricing, scaling, and risk management.
• Provides end-to-end support services for new product introduction and sales channels. 
• Offers complex and specialized services including, actuarial services, adjudication, subrogation, etc.
• Offers a mobile application for real-time status updates.

3. Accenture Inc.

Accenture is a multinational professional service provider based in Ireland with a presence across 50 countries and clients from over 120 countries. The company helps clients with decision-making by using the right resources when needed. 

Key services

• Offers policy administration, record keeping, claims management services, etc.
• Uses automation to increase back-office processing by 15-20%.
• Provides a good customer experience by creating personalized and digital customer interactions.
• Releases new insurance products into the market 60% quicker than competitors.

4. Water Street Company

Water Street Company was founded in 2000 in the USA to help insurance companies decrease costs, increase efficiency, and concentrate on core objectives. The company mainly serves P&C (Property and Casualty) insurance agencies.

Key services

• Reduces policy cycle time by automating routine processes.
• Offers scalable solutions that help launch new products and expand to new territories.
• Provides total visibility by adopting the client’s company processes and guidelines.
• Offers robotic process automation as underwriting and accounting support, claims management, back-office administrations, etc. 

For more service providers, check out our list of the top 17 BPO companies. 

Now regardless of whom you outsource to, it’s important to keep track of your outsourced team to ensure they’re working productively. 

Fortunately, you can do this using a powerful productivity management tool like Time Doctor. 

Time Doctor helps companies track their outsourced teams’ work using interactive or automatic time tracking features. And in addition to several productivity management features, the tool also offers a payroll feature to help you pay your business process outsourcing partner based on the hours worked on your project. 

Check out some of Time Doctor’s other useful features.

Wrapping up

Outsourcing your insurance processes can help you manage operations economically while accessing skilled talent from around the world. 

For your insurance outsourcing efforts to be successful, you need to decide which processes to outsource and the type of insurance BPO provider you want to outsource to. 

Use the information we covered here to understand what services you can outsource and how to go about it. And once you’ve partnered with the right BPO partner, you’ll be able to reap the benefits of insurance business process outsourcing in no time.