Financial Services Outsourcing - Targeting Key Insurance BPO Opportunities: NA and EMEA (Review Report)

• The analysis is based on interviews with over 100 insurers from the Americas, Asia Pacific and EMEA. The research was completed in Q2 of 2006.
• The data in the market focus section is based on a European and a North American insurance technology survey, each of 100 interviews.

• Improve understanding of the insurance BPO market.
• Understand the effect that outsourcing/offshoring is having on the insurance market.
• Understand insurance sourcing strategies.

DATAMONITOR VIEW

CATALYST

SUMMARY

METHODOLOGY

EXECUTIVE SUMMARY

Introduction

BPO in European and North American insurance (Market focus)

BPO and sourcing trends in Insurance (Customer Focus)

Insurance BPO (Databook)

BPO IN EUROPEAN AND NORTH AMERICAN INSURANCE (MARKET FOCUS)

Summary

Results: life side outperforms and general insurers exercise strong underwriting discipline

Life results are driven by investment returns rather than new sales as insurers look for growth opportunities

General insurance sector maintains combined ratio improvement through strong underwriting discipline

Overall outsourcing budget growth is slowing, but BPO continues to grow

Strategy development in insurance IT: insurers move to enable growth, but keep tight rein on costs

Overall outsourcing budgets growth slows as insurers look for proof of business case

BPO remains key insurance services opportunity

Healthcare policy admin and claims dominate BPO market, but remains a US opportunity

Healthcare insurance administration services is biggest area of BPO spending in the insurance sector

Pressure to improve operational profitability has been a significant driver of BPO

Services to channel partners are requiring significant technology investment generating BPO opportunities

Vendor opportunities remain focused both in terms of processes and geographic take-up

North America will remain the primary market for healthcare/medical BPO in the foreseeable future

The set of processes outsourced remains relatively narrow despite the maturity of the market

L&P policy admin BPO continues rapid growth, but lacks take-up outside UK and US

Business structures are changing as consolidators influence the market

Transformation is key to profitable growth in market

BPO AND SOURCING TRENDS IN INSURANCE (CUSTOMER FOCUS)

Summary

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?

INSURANCE BPO (DATABOOK)

Introduction

Definitions

Industry specific BPO in the insurance sector

Horizontal BPO in the insurance sector

APPENDIX

Further reading

Ask the analyst

List of Tables

Table 1: Definitions

Table 2: Insurance BPO services by lines of business globally, 2002-2008

Table 3: Total Insurance BPO services by region, 2002-2008

Table 4: Policy administration BPO services by country, 2002-2008

Table 5: Healthcare claims administration BPO services by country, 2002-2008

Table 6: Horizontal BPO by region, 2006

Table 7: Horizontal BPO by service area, 2002-2008

Table 8: Horizontal BPO by country 2002-2008

List of Figures

Figure 1: How are your IT and outsourcing budgets changing from 05 to 06?

Figure 2: What are the benefits of business process outsourcing?

Figure 3: What is your position towards outsourcing the following business processes?

Figure 4: Nearly half of insurers currently use at least one BPO service, Q2 2006

Figure 5: Insurance specific BPO looks set to grow fast over the next two years, but interest remains strong in key horizontal BPO areas

Figure 6: Three of the top four areas of outsourcing in the insurance industry remain non-industry specific

Figure 7: Insurers aim to focus on core competencies and to make their cost based more responsive to revenues by variabilising costs

Figure 8: Geographic reach and technology leadership are the most important selection criteria

Figure 9: What countries/regions would you consider most seriously were you to offshore any service?

Figure 10: Cost and labor pool access are secondary drivers to language skills and government subsidies

Figure 11: Bad PR and lacking government incentives are seen as the key downsides of outsourcing

Figure 12: Insurance BPO services by lines of business globally, 2002-2008

Figure 13: Total Insurance BPO services by region, 2002-2008

Figure 14: Policy administration BPO services by biggest 10 countries

Figure 15: Healthcare claims administration BPO services by biggest 10 countries

Figure 16: Horizontal BPO by region, 2006

Figure 17: Horizontal BPO by service area, 2002-2008

Figure 18: Horizontal BPO by biggest 10 countries