Almost 54% of all companies use third-party support teams to connect with customers. An excellent outsourcing transition leads to long-term benefits. Globally, businesses spent $75.2 billion on outsourcing security last year. To be precise, Insurance outsourcing is an efficient way to simplify your P&C insurance operations; policy management, claims processing, and other operational support that demand a lot of time of an organization.
Insurance outsourcing allows insurance companies to adapt to the virtual environment. Now more and more companies are doing business online. As a result, the insurance Business Process Outsourcing (BPO) Market was valued at USD 5.8 Billion in 2020 and is projected to reach USD 10.2 Billion by 2028. With Insurance Outsourcing services, outsourcing providers can make significant technology investments and effectively interact with the customer.
Top Concerns for Outsourcing:
- Technology
- Underwriting
- Expense management
- Claims
- Compliance
- Talent
However, there are many myths and misconceptions about insurance outsourcing. Following are some of the most common myths, along with the facts that dispel them:
Myth #1: Insurance outsourcing is only for large companies.
Fact: Insurance outsourcing is a viable option for organizations of all sizes. In fact, many small and medium-sized companies outsource their insurance needs to save money and improve efficiency. By taking advantage of insurance processing and claims management, small or medium-sized businesses can save time, money, and resources.
Myth #2: Insurance Outsourcing is only for simpler tasks.
Fact: Outsourcing usually reduces the company’s load to ensure that the core operations are handled efficiently. Insurance outsourcing services can be used for a majority of tasks, including complex ones from claims processing to underwriting.
Common tasks typically outsourced by insurance companies include:
- Accountants and bookkeepers
- Accounts payable and receivable
- Payroll
- Claims processing and analysis
- Insurance agents and brokers
- Underwriting
- Policy management
- Full range of IT positions from systems design to data entry and management.
- Insurance Analytics
Myth #3: Outsourcing is expensive.
Fact: Deloitte reports that 61% of respondents to their 2021 Insurance Outlook survey plan to cut costs by 11% – 20% over the next 12-18 months. Asia-Pacific insurance firms, especially in Australia and Japan, plan deeper cuts (more than 20%) compared to most of their counterparts in Europe and North America.
Skilled IT personnel are in short supply, and wages are high, especially in the US. Outsourcing to an offshore location puts highly-qualified tech talent in your team at a fraction of the cost – as much as 70% less.
Facilities management expenses can be quite high for majority of insurance companies due to higher employee numbers located in headquarters and branch offices. On the contrary, Outsourcing supports cost effective decisions to close offices or dramatically reduce physical space while maintaining and improving operations and customer experience.
Myth #4: Outsourcing is risky.
Fact: Any business decision carries some degree of risk. However, the risks are minimized when you partner with an experienced and reputable insurance outsourcing company.
A survey made by BI Norwegian Business School reports that the main drivers for outsourcing today are:
- Access to resources and competence
- Focus on core business
- Flexible provision of services
- Improved quality of services
- Redesign business processes
- Accepted practice in the industry
- Pressure from competitors
- Access to new markets/growth
Myth #5: Outsourcing provides low-quality services.
Fact: Many excellent outsourcing companies nowadays provide exceptional services and high-quality outputs. Little to zero companies plan to stop outsourcing due to low-quality services. It is because outsourcing companies rely on hiring skilled and high-performing staff and investing in improving their expertise to compete in the market. Outsourcing companies hire insurance specialists to settle insurance claims fast.
Outsourcing frees up human and other resources so they can be directed toward what matters most:
- Sharpening focus on product development and delivery
- Boosting speed to market, to bring new revenue streams online sooner
- Renewing emphasis on building customer relationships and lifetime value.
The outsourcing of insurance has developed continuously to meet market demands. So if you are considering insurance outsourcing for your business, choose the best by matching the business’s capacity needs and work culture. Don’t let these myths cloud your judgment and remember while working with a reputable outsourcing company, you would still be involved in outsourced operations, and they will still very much feel like a part of your company.
