BPO and Sourcing Trends in Insurance (Customer Focus)

Business process outsourcing (BPO) take-up continues to rise in the insurance sector as insurers look for operational efficiency enhancements as well as growth opportunities. This brief provides end-user insight in terms of take-up, planned BPO and attitudes to BPO and offshore sourcing. The brief covers insurance specific processes and functions as well as horizontal processes.

• 100 in-depth insurance interviews providing detailed understanding of current and planned outsourcing
• The analysis is based on interviews with insurers from the Americas, Asia Pacific and EMEA.

Nearly half of insurers use BPO: insurers have made great progress in terms of BPO acceptance with the practice having gone from being considered a risky strategy for the few to a mainstream strategic choice. In fact it shows that that insurers to a degree feel compelled to put BPO on the C-level agenda.

The horizontal processes such as HRO, F&A and CRM continue to grow significantly despite their dominance in terms of absolute usage. However the fastest growth going forward will be in the industry specific processes such as claims processing and policy administration.

India's leadership in the offshore sourcing industry is all but assured, but a number of contenders are emerging in individual service areas. Eastern Europe, Canada and South Africa will be particularly well placed to benefit from growth in higher value BPO services.

• Benefit from in-depth understanding of insurance drivers in the BPO and offshore sourcing space
• Improve the targeting of your services according to the end-user preferences
• Position to take advantage of the growth in key BPO areas

DATAMONITOR VIEW

CATALYST

SUMMARY

METHODOLOGY

ANALYSIS

Nearly half of insurers currently use at least one BPO

Claims and policy administration BPO will be among the fastest growing BPO areas

CRM remains the most developed area in terms of advanced sourcing strategy

Cost based benefits no longer dominate sourcing agenda

Key drivers for BPO take-up

Vendor selection criteria

Eastern Europe, Canada and South Africa are the key emerging BPO sourcing destinations

Offshore outsourcing drivers

Offshore drawbacks: is there a threat to continued growth?

METHODOLOGY

Further reading

Ask the analyst

List of Figures

Figure 1: Nearly half of insurers currently use at least one BPO service, Q2 2006

Figure 2: Insurance specific BPO looks set to grow fast over the next two years, but interest remains strong in key horizontal BPO areas

Figure 3: Three of the top four areas of outsourcing in the insurance industry remain non-industry specific

Figure 4: Insurers aim to focus on core competencies and to make their cost based more responsive to revenues by variabilising costs

Figure 5: Geographic reach and technology leadership are the most important selection criteria

Figure 6: What countries/regions would you consider most seriously were you to offshore any service?

Figure 7: Cost and labor pool access are secondary drivers to language skills and government subsidies

Figure 8: Bad PR and lacking government incentives are seen as the key downsides of outsourcing