Insurance Industry Goes Big On Outsourcing
Global insurance business process outsourcing market expected to increase to US$65.88 billion by 2026
More and more companies are expressing confidence in outsourcing some of their functions, with Deloitte’s 2016 Global Outsourcing Survey suggesting that 78% of all the businesses report positive feeling about their outsourcing partnerships.
According to a report by Grand View Research, the global market for business process outsourcing is set to reach $343.2 billion by 2025, growing at a compound annual growth rate of 7.4%.
The market is increasingly driven by the benefits that the companies see in outsourcing their business processes, including:
- Reduction in operational overheads
- Improved flexibility and scalability
- Introduction of new technologies
- Increased focus on core competencies and business
- Increased access to intellectual capital
- Better resource management and improved cost efficiency.
Insurers and Outsourcing
According to a report by QY Research, the global insurance business process outsourcing market is expected to increase from US$47.92 billion in 2019 to US$65.88 billion by 2026, growing at a CAGR of 4.6% during the forecast period.
Reduction of operational overheads is not the sole factor encouraging insurers to embrace business process outsourcing. Remaining competitive in this digital age by assimilating cutting-edge technologies within the operations and tackling the shortage of talent in the insurance sector are among the reasons that have motivated insurers to consider outsourcing.
Technology is one of the major factors that has motivated insurance industry to consider business process outsourcing more staunchly, as insurers can off-load heavy technology investments by leveraging technologies that their outsourcing partners have already invested into.
With outsourcing companies’ continued investment in robotic process automation, big data, machine learning and other technologies, insurers are set to benefit from their outsourcing arrangements.
Insurance industry is facing a shortage of talent, with several currently working in the industry nearing their retirement age and millennials showing little interest in entering the insurance segment.
The US insurance sector is projected to have nearly 400,000 unfilled job openings by the end of 2020, according to the US Bureau of Labor Statistics.
Such shortage of skilled personnel in the insurance industry is driving the insurance companies to outsource their operations, mainly back-end functions, to third-party vendors. Outsourcing allows insurers to access wider intellectual pool as well as improve operational flexibility and scalability, all at reasonable costs without investing in in-house hiring.
Digital Age and Customer Experience
In the era of social media platforms and digital mediums, companies are required to be at the service of customers at any given time. Engaging deeply with the customers and offering better customer experience is directly linked to higher customer satisfaction and thereby their retention. Insurers need to offer personalised solutions to their customers, and this can be effectively done once they profile their customers accurately and understand the market conditions. For this, the insurers are increasingly turning to third-party providers, who can collect, categorise and analyse customer and market data for the insurers and offer business insights and information essential for taking informed decisions.
Outsourcing helps the insurers to focus on their core competencies while passing on some functions to the outsourcing services providers, who have domain experts to handle the processes more efficiently.
So, if you are mulling over outsourcing your business processes, give Cognition Solutions (formerly Cheers Interactive) a thought. With a long and extensive experience of working with some of the insurance industry bigwigs, we come armed with a host of services that can support your business needs.
We offer Sector Analyst Support through our team of experienced and reliable analysts, who work actively with the clients to cater to their requirements.
Our team of qualified experts have the functional expertise in business research, investment research, data management, data processing, analytics and financial modelling. We have the scale and agility to adjust to the changing requirements, all while ensuring efficient and seamless delivery of services.