Service providers help insurers create and manage their digital presence, which is increasingly important today in addressing the ever-evolving expectations of tech-savvy customers
Dallas, TX (PRWEB) July 12, 2017
The global property and casualty (P&C) insurance business process outsourcing (BPO) market continues to register high growth, attaining nearly 13 percent compound annual growth rate (CAGR) over the last four years to reach US$1.6 billion in 2016, according to new research from Everest Group. Everest Group expects the market to grow at 12 to 14 percent in 2017 as insurers face intensifying pressures on profitability.
The growth in the P&C Insurance BPO market is largely being driven by first-generation buyers—insurers who are outsourcing P&C insurance operations for access to technology solutions and cost reduction.
However, the market is also getting a boost from tenured buyers with more evolved expectations. These buyers are demanding value addition, including assistance in expanding their businesses, reducing time to market, getting higher customer mindshare and building multi-channel capabilities.
Service providers are responding by developing better solutions. For example, automation is being swiftly adopted, as its benefits include cost reduction, improved quality (reduced errors) and speed, higher compliance and enhanced security. In fact, Everest Group research indicates that robotic process automation (RPA) can yield incremental cost reduction from 15 percent for offshore operations to as high as 45 percent for onshore operations.
Another solution that service providers may soon bring to bear for insurers is blockchain, a disruptive technology that is expected to transform the way insurance operations run. Numerous insurers across the globe are currently evaluating and piloting blockchain in key P&C insurance processes such as premium collection, disbursement and subrogation.
In addition, many providers are augmenting their capabilities with analytics to deliver judgment-intensive processes, such as fraud detection/prevention, actuarial and underwriting services, customer experience management and marketing, and claims adjustment.
“Insurers are looking to service providers to move beyond the expected bottom-line impact to deliver top-line impact,” said Skand Bhargava, practice director, Business Process Services, at Everest Group. “By that we mean that insurers rely heavily on their service providers to bring in next generation technological capabilities to stay relevant and competitive in the marketplace. For example, service providers help insurers create and manage their digital presence, which is increasingly important today in addressing the ever-evolving expectations of tech-savvy customers and fending off competition from ‘InsurTechs.’ Another example is blockchain; service providers that facilitate successful blockchain deployments for their clients will be true transformation partners.”
Everest Group explores these findings and others in a recently published report: “Property and Casualty (P&C) Insurance BPO Annual Report — Embracing the Digital-First." This report provides comprehensive coverage of the global P&C insurance BPO market, including adoption trends across geographies and buyer size, factors impacting the market, key solution characteristics, emerging trends and service provider landscape.
Other key findings:
- While North America continues to lead P&C insurance BPO adoption with over three-fourths of the total contracts, the United Kingdom and other geographies, such as Australia and Europe, are driving outsourcing adoption.
- Leverage of offshore locations to deliver P&C insurance processes continues to be high, with more than 80 percent of the total FTEs based in offshore and nearshore locations.
- Small and mid-sized buyers are increasingly signing more comprehensive deals.
- Increasing adoption of automation along with higher adoption of platform-based solutions within P&C insurance contracts is reducing the FTE-intensive play in transaction-based processes such as claims management.
- With several deals up for renewal in the next three years, intense competition between service providers is expected to increase pricing pressures.
- Claims processing and policy servicing/reporting remain the most outsourced processes.
About Everest Group
Everest Group is a consulting and research firm focused on strategic IT, business services, and sourcing. We are trusted advisors to senior executives of leading enterprises, providers, and investors. Our firm helps clients improve operational and financial performance through a hands-on process that supports them in making well-informed decisions that deliver high-impact results and achieve sustained value. Our insight and guidance empower clients to improve organizational efficiency, effectiveness, agility and responsiveness. What sets Everest Group apart is the integration of deep sourcing knowledge, problem-solving skills and original research. Details and in-depth content are available at http://www.everestgrp.com.
Andrea M. Riffle, Everest Group
Jennifer Fowler, Cathey Communications for Everest Group