L&P Insurance BPO providers offer scalable, cost-efficient digital talent and technology to help insurers remain relevant and competitive.
The Life and Pension (L&P) business process outsourcing (BPO) market has seen a consistent pace of year-on-year growth in the range of 9 to 10% since 2014. According to Everest Group, growth will accelerate in the future, jumping from a market size of US $2.3 billion in 2017 to US$3.1 billion by 2020.
“In 2019, we will see buyers in the L&P insurance BPO market increasingly partnering with service providers to leverage their technological capabilities and expertise,” said Skand Bhargava, practice director, Business Process Services, at Everest Group. “In particular, as insurers’ hurdles continue to magnify and the need to address inefficient legacy systems becomes unavoidable, buyers will be even more open to leveraging external resources for digital enablement. Thus, providers who have invested in digitally modernized and integrated platform solutions are going to have a clear advantage.”
Currently, the L&P insurance market massively lags behind other industries in adapting to the digital era; however, the following market forces are pressuring insurers to augment their front-, middle-, and back-office operations and connect these together through digital systems:
- Growth opportunities in new product classes such as voluntary and worksite benefits, whole life and individual universal life. Delivering these products will require product innovation, speed-to-market, and customer experience delivery, all of which can be enabled and enhanced by leveraging digital capabilities.
- Increasingly costly and complicated regulatory compliance requirements. In the UK, for example, L&P insurers are being impacted by Automatic Enrollment, Pensions Freedom and GDPR. Digital solutions can address the burdens of these requirements by enabling data visualization, providing analytics for identifying regulatory risk areas, and automating workflows for efficient compliance.
- An evolving competitive landscape, including challenges from InsurTechs and continual competitive shifts from strategic mergers and acquisitions (M&As).
Everest Group advises L&P insurers to leverage partnerships with L&P BPO service providers to:
- access the requisite talent and digital technologies at scale and efficient costs
- gain from service providers’ experience in digital implementations
- identify greater opportunities for digital interventions
These findings are discussed in more detail in “Life and Pensions (L&P) Insurance BPO Annual Report 2019: Digital a Potential Game-changer but Insurers Stuck in Legacy Mode.” This report provides comprehensive coverage of the global L&P insurance BPO market, including the adoption trends across geographies and buyer size, factors impacting the market, key solution characteristics, emerging trends and the service provider landscape.
Other Key Findings:
- New deals were signed across almost all geographies, with the exception of Latin America and Middle East and Africa.
- Buyers’ inclination toward continuing with their incumbent service providers is being reflected by the market growth, which is primarily attributed to contract renewals and expansion in the existing scope of services.
- Small- and mid-sized buyers are increasingly opening up toward outsourcing and now contribute to the market almost in the same proportion as large-sized buyers.
- As a greater number of L&P insurers realize the need for digitalization of operations to adapt to the market forces and strengthen their competitive positioning, service providers need to be prepared for such opportunities through requisite investments.
About Everest Group
Everest Group is a consulting and research firm focused on strategic IT, business services, engineering 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 empowers 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.