When it comes to insurance technology outsourcing, insurers have moved beyond “lift and shift” labor arbitrage and now are focused on expanding services and enhancing service delivering technologies, according to Everest Global Inc.’s “IT Outsourcing in Insurance Annual Report 2013: SMAC is the Panacea for all Insurance Industry Problems.”
To address the need for integrated service delivery, Everest says insurers’ technology themes include:
- Social media to address and attract customers, while enhancing the engagement quotient
- Mobility, to enhance functionality, convenience and access, while improving customer engagement and visibility
- Big data and analytics to improve underwriting performance, manage usage-based solutions, pattern recognition through spending and usage patterns and manage claims
- Legacy modernization and standardization, resulting in cost reduction and improved governance.
According to Everest, there are several emerging priorities and investment themes that are driving insurance application outsourcing, including:
- Weak economic growth, low interest rates, depressed investment income and increasing competition
- Increased commoditization, threat to the agency model, underwriting performance and margin pressure
- Improving customer centricity to retain existing customers
- Improving capital and risk management to address changing regulatory environments
- Mergers and acquisitions to augment growth, especially by moving into emerging markets
- Systems modernization to improve agent retention, increase productivity and improve customer service and loyalty, which corresponds to increased revenue.
As a result, Everest says, insurers also are looking for ways to enhance risk management, reexamining asset allocations and searching for new ways to generate returns. Efforts to enhance customer experience, manage risk optimally and improve efficiencies to drive greater productivity, led to an 18-percent year-over-year increase in spending in the insurance vertical, Everest said.
“Buyers in the insurance vertical, traditionally considered conservative, are increasingly embracing the value shift away from cost compression in ITO and BPO,” said Rajesh Ranjan, Everest Group VP. “It is leading to greater focus on integrated service delivery that combines technological solution, operation excellence, and analytics-led insights. Service providers are adapting quickly, selling value including customer experience and reduced risk.”
Customer experience and customer demands have become critical factors in the performance of insurance companies, Everest says, which has required many insurers to simplify product orderings, make policies more transparent, simplify customer interactions and offer real-time, personalized interactions.
There are many implications for insurers considering these changing customer expectations, which require them to redefine customer relationships, invest in multi-channel distribution and employ data analytics and predictive modeling to generate insights into customers, and their life-time value, Everest said.
Related content: Insurers’ Share of IT Outsourcing Market Increased and Insurance AO Activity Doubles
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