ISG Provider Lens™ Insurance BPO Services - Property & Casualty Services - U.S. 2021
Meeting The Evolving Technology Needs of Today’s Insurers
Like most industries, insurance was turned on its head when the COVID-19 pandemic hit in early 2020. There was widespread disruption to normal business operations as employees had to work from home, with only essential personnel permitted in the office environment. In-person agent sales were limited due to COVID-19. There was a loss of premiums on some lines of business impacted by pandemic restrictions, like travel, which suffered losses as people stayed in place. Life insurance payouts were the highest in more than 100 years. Business interruption insurance claims soared as companies of all kinds were stuck without business continuity provisions in place. But the impacts were not all bad. Because people were not getting out and about during lockdown periods, claims decreased in many segments. And demand for life insurance products increased substantially, as families and individuals considered their own mortality a little bit more seriously.
In order to drive sales, carriers needed to be able to sell remotely with mobile applications that would deliver an Amazon-like experience. With more people working remotely, insurers needed the right technology in place to help associates do their jobs from home. Many carriers that were far along in their digital transformations and had advanced digital capabilities pre-pandemic were able to shift easily to remote sales and work models because they could provide their customers and workforces with tools and technologies to automate processes and connect them with agents and colleagues, as they were already using these tools across their offices. Other carriers were left scrambling to put the right processes in place, to keep their internal workforces and distribution channels in business.
Today, approximately two years after COVID-19 altered normal life in the U.S., insurers are turning to business process services providers that offer a variety of people, processes and technologies to help carriers navigate the new normal and to deal with the challenges – and take advantage of the opportunities – the pandemic has presented. Insurance companies have tapped provider expertise to supplement their own in-house talent in response to the Great Resignation. They are leveraging provider technologies to automate processes and reduce manual handling to reduce headcount in some areas, and to redirect their company professionals in areas like underwriting and claims to more value-added activities. And they are turning to providers to build and grow their online sales channels, help them innovate and differentiate, cut costs and optimize their processes – from onboarding to claims and disbursements.
While provider technologies have helped carriers during the pandemic, the same technologies will help organizations remain competitive and meet new and existing challenges going forward into the future. Many life and retirement (L&R) and property and casualty (P&C) insurance organizations are still dealing with pre-pandemic issues like legacy system constraints, while selling to an increasingly digitally savvy public that wants a personalized experience, talent attrition, increasing competition from traditional and non-traditional market players, regulatory mandates, cybersecurity concerns, data challenges, ever-increasing operating costs and an imperative to grow.
L&R and P&C business process outsourcing (BPO) service providers and third-party administrators (TPAs) can help carriers in the following ways.
Achieve market growth: Today, insurance organizations have an imperative to grow, either inorganically through mergers and acquisitions, or organically by increasing revenue and sales. At the same, boosting sales and increasing market share is becoming increasingly difficult. Carriers need to successfully compete not only with traditional insurance organizations, but with non-traditional players like InsurTechs that typically don’t have the burden of complex legacy environments and can operate more nimbly than established carriers. Carriers across segments need to be able to innovate quickly, to bring new products that fit evolving customer needs to market rapidly or to expand into new geographies with ease and to satisfy customers, whether in commercial or personal lines. And as insurers work to ensure that they are meeting the requirements to grow in the marketplace, they also must contain costs.
Insurance organizations of all types and across all segments are looking to BPO service providers and TPAs to meet these objectives. Providers can help carriers get products to market and get established in new markets. Many providers have sophisticated analytics and data management capabilities that can help insurers make sense of their data so they can get the right insights to inform their strategic business decisions on everything including product development, risk management, pricing and fraud detection.
Realize operational efficiencies. Balancing the imperative to grow with the imperative to cut costs and run lean and mean is no easy feat. Carriers can manage both by optimizing efficiencies across the enterprise, and provider technologies can help. There are many ways that insurance organizations can operate more efficiently and effectively. For example, automating parts of the underwriting process can free highly trained and effective professionals from performing redundant and manual tasks so they can focus on their core competencies. Providers that offer insurance organizations tools that can capture both structured and unstructured data and then perform an analysis on the information can enable more accurate pricing aligned to risk, boost productivity and improve employee satisfaction. Carriers can also opt for a more end-to-end approach, automating the insurance policy lifecycle from application to claims for efficiencies across processes. Outsourcing arrangements can allow insurance organizations to reduce or avoid enormous capital expenses.
Meet evolving customer expectations. In today’s market, customer experience is a competitive differentiator, and insurance organizations are under constant pressure to ensure that they meet ever-changing customer expectations. If a policyholder does not receive exemplary service, does not feel valued, has a disappointing or frustrating online experience or cannot conduct business with his or her insurer via a preferred channel, he or she may opt to buy coverage elsewhere. Consumers are now demanding that every interaction with their insurer to be frictionless and pleasant, and they want to do business on their own terms.
BPO services providers and TPAs can help carriers create personalized experiences, facilitate processes from applications through claims, and ensure omnichannel communications with policyholders. Providers can help carriers offer the self-service options policyholders demand. In addition, many providers offer technology to help improve the agent and broker experience, leading to better relationships and increased sales.
Secure the enterprise. Insurance organizations deal with highly sensitive data. Commercial carriers need to gather and process proprietary data from businesses, while life insurers deal with medical records and other personal information. Insurers absolutely need to uphold the highest level of security and compliance in their organizations. There are serious ramifications to security breaches, including loss of policyholder trust, regulatory and legal fines, damage to a company’s brand and ultimately, lost business.
It’s understandable that carriers might have reservations about entering into a business relationship with an outside services provider. Today, however, providers are coming to the table with processes and extensive capabilities that meet or exceed the regulatory data protection standards. These provisions can help carriers feel more confident that their customer and business data is secure. At the same time, many BPO services providers and TPAs offer sophisticated fraud detection and data security technologies that help organizations proactively fight against fraud and cyberattacks.
ISG evaluated insurance BPO services providers in the L&R and P&C space along with TPAs to gauge their ability to meet the evolving needs of carriers across segments.
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