ISG Provider Lens™ Insurance BPO Services - Archetype Report 2019

Dynamically Changing Landscape of Insurance Industry

This report analyses the changing buying patterns of enterprise clients in the sourcing world. Enterprises are under tremendous pressure to adapt to changing needs from their consumers. With the emergence of technologies, enterprises are now looking to partner with their service providers to drive changes. In a highly competitive industry such as insurance, enterprises are facing stiff competition. Added to competition are so-called insurtechs, which are disrupting the industry by releasing new technologies and new ways of operating. End users no longer need to contact a call center to purchase a policy or wait for an agent. Today, purchasing a policy is a click away on your mobile device, or you can browse through a marketplace to get the best priced policy.

BPO has traditionally operated in a “lift-and-shift” technology transition model. But with the onset of technology and changing consumer demands, enterprise expectations from their outsourcing partners are changing. The enterprises are turning toward their sourcing partners with an expectation to solve their business problems, improve their brand, impact their top or bottom line, improve customer loyalty or improve customer retention.

Cost savings continue to be one of the reasons for outsourcing but not the topmost reason anymore. In outsourcing engagements, in order to exhibit a partnership relationship, the measurement metrics will differ greatly from traditional metrics. Value-added services will be a great driver for sustainability of relationships.

Also, with changing technology and nature of engagements, improved communication and facetime with sourcing partners will be beneficial. Enterprises are now looking for nearshore/onshore operations, and engagements are required to have good shoring mix. A pure-play offshoring model for non-critical point solutions continues, but for transformation-related projects, this will likely not be the sole option.

We have identified top business imperatives that help insurers to stay ahead of the competition. We have also looked at these business imperatives from a sourcing engagement perspective and what service providers are currently providing and what more they can provide for successful engagement.

1. Better customer experience – With channel proliferation, information is not only flowing across various channels but is flowing in abundance and with higher frequency. Adopting omnichannel solutions so that the channels are integrated and the information flow is seamless will be essential to drive enriched customer experience.

2. Digital Enablement – Adoption of digital technology is the new normal. Enabling end users, agents and other stakeholders with a single source of truth for better user experience is imperative. A lack of progress in adopting technology will hamper the growth of the insurers significantly. Technologies deliver great benefits. Selecting and implementing the technology that is highly beneficial to your consumers is the key step that most enterprises must embark on. Some of the technologies that have made or about to make huge impact on the insurance industry are:

• RPA and AI making inroads – Traditional business models are becoming or will soon become irrelevant if operated in the same way. Few years back, robotic process automation disrupted the BPO industry by redefining the nature of jobs in the industry, improving productivity, improving efficiency and saving time and costs. It continues to pave way in making processes more efficient. It is an inevitable adoption, and organizations must have a roadmap to define the automation of repetitive processes. With the infusion of machine learning, the insurance industry has been able to transform the product lifecycle, from purchase to claims, as a touchless process. Machine learning coupled with robotic process automation will enable higher efficiencies, and machine learning will take care of simple decision-making processes, thus minimizing human involvement in routine processes. Today, machine learning can assess the intensity of damages using pictures captured by drones and satellites to process claims, thus, reducing the time significantly.

For example: WNS is exploring the possibility of implementing drone imagery to assess intensity of rooftop damages in areas hit by calamities.

• Platform-driven approach – Most insurers are actively looking for avenues to move to the cloud or adopt hybrid cloud infrastructure. Speed, flexibility and scalability continue to be the benefits of moving to cloud. With changing dynamics, insurers must be ready to react quickly to the industry. Focus on cloud technology will enable them to lower costs on legacy maintenance and achieve operational excellence. Insurers gain a competitive advantage with cloud platforms even from a go-to-market strategy, including product launches. Service providers in this industry have built various platforms, BPaaS solutions and plug and play modules.

For example: NTT Data has been able to complete the conversion of 4 million policies for nearly 30 of its clients onto its digitally enabled platform LifeSys™ for policy administration.

• APIs are the new enablers – While transformation is critical in today’s era and essential for survival against the competition, a lot of insurers are still sitting with legacy systems. With many disparate systems, APIs can enable better communication for a better user experience. Companies like Lemonade and Insly have customer service APIs built to enable online sales, pricing quotes, claims, etc. This will help insurers to transform their businesses in a secure way.
• Emergence of robo advisors – There is an increase in the usage of robo advisors with the capability of providing personalized services by understanding the customer requirements. Robo advisors process data from various systems in real-time to give most relevant and personalized services, thus decreasing the turnaround time for policy-related queries. The availability of these advisors is 24/7 and not only will they lead to faster response but they also help in generating more leads.
• Adoption of social media is on the rise – Purchase of insurance policies is just a click away. With calls becoming limited to only complex queries, most consumers would like to purchase a policy or manage their claims online either using their mobile app or a social media channel. With increased traffic on social media, insurers are paying more attention to these channels. Studying the social media usage patterns and other behavioral data, insurers can predict and understand customer sentiments to deliver tailormade responses achieving personalization goals.
• Rise of insurtechs – After the fintechs, it is insurtechs that are looking to disrupt this industry with cutting edge technology to offer to end users. Insurtechs have made innovation easily available and adoption is seamless. More and more insurers are aware of the disruption technology is causing to this industry and at the same time looking for avenues to engage with insurtechs. Outsourcing service providers, on the other hand, are partnering with several insurtechs to build an ecosystem to leverage the technology for its clients to help them with faster go-to-market.

For example, providers like DXC Technology and Cognizant are partnering with several insurtechs to deliver services to its clients.

• Emerging technology revolution – Insurers already deal with a lot of data, and with the advent of technology such as wearables or connected cars, data is getting fed to them every second. Whether it is a premium calculation for medical insurance depending on the data from wearables or speeding data from your car that determines your insurance claims, the Internet of things will transform and empower insurers with lot of insights about their consumers.

In property and casualty space, insurers are exploring the adoption of drone technology to assess areas hit by calamities and measure the intensity of damage to your property to process claims instantly during distress. All of this and more will heavily impact the industry. With increasing end-user expectations for faster response, accuracy, personalized services and, more importantly, the rapid adoption of technology among end users will put immense pressure on insurers to adapt to changing times.

3. Data Insights are value add drivers – Using data to derive insights and serve your customers is not new. But it’s worth reiterating that this is important because this is one of the critical pillars of success for insurers. Insurers collect large amount of data from consumers every day and every minute. The next challenge that insurers are faced with is how to utilize the data to serve their customers better. Data insights will be essential to enable agents to serve customers better. With the exposure into data points end to end, insurers can strive to deliver personalized services to their customers. Analytics will play a huge role in claims, tackling fraudulent claims, policy serving, pricing, underwriting, etc. With growing numbers in connected devices, technology such as IoT will feed insurers with tons of data. This is will invigorate insurers with firsthand data that will help them with more accurate pricing and risk assessment and help them manage fraudulent claims.

When viewed from a sourcing engagement perspective, data insights when proactively delivered by service providers to their clients will be greatly beneficial and help insurers get better at risk assessment. This is one of the critical pillars of successful engagements and, at the same time, one of the key reasons why most engagements don’t see the value when not delivered. According to ISG Research, clients state that this is one of the areas of improvement for most service providers. Adding value to the data collected and bringing more meaningful or impactful actions is essential.

4. Security is not a choice – Insurance is a highly regulated industry. Securing the information is of prime importance, especially for insurers that deal with sensitive and personal information. Today it’s not only the amount of information but also the frequency of the flow of information that has rapidly increased. Securing the data and systems from being vulnerable to attacks must be a high priority on insurers’ agenda. Compromise on security can cost the companies dearly. Protecting the data and preventing loss of sensitive data or preventing fraudulent claims is critical to organizations, and technology such as blockchain can help build a secure and trustworthy relationship with customers. Validation and verification of data especially during claim management can be an easy and time-saving process with the usage of lockchain technology. With number of use cases identified, technology such as this can help insurers to secure the data and avoid compromises. With the introduction of regulations such as GDPR and New York Department of Financial Services Cybersecurity Regulation, companies must appoint a chief information security officer or data protection officer. With increasing fraudulent claims, the insurance industry will need to invest to protect data.

• Talent hunt continues – Although automation has displaced jobs, people will continue to be the critical factor for success for all companies. The shift in talent and job descriptions has forced organizations to redefine talent strategy. Repetitive and redundant tasks are automated, which leaves the organizations to develop talent who are specialists in their domain to respond to complex queries. Focusing on developing subject matter experts will not only help in solving complex problems but it will also help in bringing technology and aptly apply to functions or processes.

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