Is Outsourcing Back-Office Functions Making the Insurance Industry More Future Ready?
According to Ernst & Young’s Global Insurance Trends Analysis 2018, the insurance industry not only showed steady growth in 2018, but also is estimated to increase by another three to four percent by the end of 2019. Insurers looking to capitalize on this financial trend and update systems are adopting strategies to ensure business operations are as streamlined and efficient as possible.
However, challenges such as legacy technology hurdles, shifts in consumer buying preferences, and changing compliance laws and regulatory requirements have limited insurance companies in their ability to achieve a greater competitive advantage and to meet specific business goals. It is for these reasons more insurers are looking to business process outsourcing (BPO) as an effective solution to address a multitude of back-office issues and to create new opportunities for driving profitable growth.
What is the back office?
According to Investopedia, the term “back office” was coined when companies used to design their offices with specific front and back areas. The front area comprised workers who interacted with customers only, while workers in the back area were tasked with duties that required virtually no customer interaction.
In many ways, the role of the back office has remained unchanged over the years. Today, it continues to be defined as a section of a company comprising non-client-facing administrative and support personnel. It’s also a part of a company that, while a supportive and essential component, includes positions that don’t directly generate revenue — such as accounting, billing, claims settlements, IT services, and regulatory compliance, to name just a few.
What is business process outsourcing and how can it help?
When it comes to the resources necessary to properly maintain back-office functions, increased pressure on organizations to support these types of services with the required manpower while remaining profitable has become a challenge. Which is why business process outsourcing services are becoming more mainstream, offering companies a solution to enhance productivity and accuracy in a number of key areas.
Simply put, BPO involves delegating a company’s back-office functions to a third-party provider — a trend that’s catching on at a rapid clip. In fact, according to a report by Global Industry Analytics, Inc., the size of the global outsourcing market reached $24.6 billion in 2017 and is predicted to hit $220 billion by 2020.
Today, outsourcing has become a beneficial strategy for insurers to efficiently manage more complex and time-consuming back-office functions in order to improve overall business performance. Key benefits for outsourcing can allow insurers the ability to:
- Reduce workloads and operating costs
- Increase flexibility and scalability
- Expand core business functions
- Streamline administrative services
- Standardize business processes
- Manage compliance, regulations, and reporting
- Reduce new product time to market
- Improve customer service satisfaction and retention
While there are a number of areas in which BPO can benefit insurers, some of the more notable trends in back-office outsourcing in 2019 include:
- Premium and claims payment processing
- Policy management
- Administration services
- Claims management
- Commission management services
- Insurance data processing
- Insurance accounting
The insurance industry has always lagged a bit when it comes to the adoption of new practices. So while outsourcing may not be as common in the insurance industry compared with other sectors, it is certainly gaining popularity. With today’s technologies and the right strategy, outsourcing BPO is advancing the industry into the future, allowing insurers to substantially minimize operating expenses, streamline back-office operations, and transform business models to be successful on an operational and financial level — all while improving customer service to policyholders.
Thinking about streamlining your company’s payment processing? At One Inc, we’re helping insurers offer policyholders electronic payment options to increase the speed at which they remit premiums payments and receive claims settlements. We’re helping insurers turn payments from burdens into opportunities by streamlining their payment processing and claims settlement payments on a platform that’s designed to integrate with existing core systems.
Contact us to learn more about our secure Digital Payment Processing Platform for insurers, including inbound premiums and outbound claims payments.
As the lead writer at One Inc, Patricia is passionate about helping insurance companies successfully overcome modern industry challenges. She offers news, stories, and tips to help insurance professionals improve sales and retention, enjoy greater operations efficiency, and provide the best value possible to your policyholders.