L&P insurance BPO scope of services will expand beyond traditional policy administration to value-additive services such as product launch and distribution channel expansion.
Everest Group predicts 9 to 11% growth in the Life and Pension (L&P) insurance business process outsourcing (BPO) market in 2020 on the heels of 9% growth in 2019. Everest Group projects the industry’s most prominent trend in 2020 will be a growth in demand for end-to-end third-party administration (TPA) services and Business Process as a Service (BPaaS).
The L&P insurance BPO market has seen a consistent pace of year-on-year growth in the range of 9 to 10% since 2014 as the industry has experienced a modest evolution in buyer-service provider relationships. L&P insurance third-party outsourcing arrangements are moving beyond transactional services to strategic business growth and transformation support. For example, high-growth services include new product launches, expansion of distribution channels, and customer financial advisory services.
Service providers’ expansion of capabilities to more value-additive services is also absolutely necessary for competitive differentiation, since higher straight-through processing, self-service, and automated process will make the traditional policy administration services more standardized across providers.
To differentiate and also accommodate the growth in demand for end-to-end TPA/BPaaS services, almost all the major service providers continue to invest in core policy administration platforms, digital augmentation applications and talent capabilities.
“In 2020, buyers in the L&P insurance BPO market will significantly favor service providers that have shifted their core value propositions to align with buyers’ strategic growth priorities,” said Skand Bhargava, practice director, Business Process Services, at Everest Group. “In the coming year, we will see third-party outsourcing partnerships redefined around customer satisfaction, digital transformation, operational optimization and innovation in product development and distribution. Many of these demands require digital capabilities, including cloud-based platforms, analytics, and robotic process automation. As a result, we inevitably will see those service providers who have invested in these capabilities widen the competitive gap in the service provider landscape.”
These findings are discussed in more detail in “Life and Pensions (L&P) Insurance BPO: Annual Deal Trends Report 2020.” This report provides a detailed analysis of the L&P insurance BPO market size and growth, buyer adoption trends, solution characteristics, and service provider landscape; it also features a focused analysis of the annuities and pensions BPO market.
Other Key Findings:
- While new contract signings are declining, the end-of-life legacy systems and the need to free up capital for new-age investments are collectively contributing to larger deals in the market.
- Apart from the traditional geographies, such as North America and the United Kingdom, the emerging markets are also witnessing decent activity. Asia Pacific and Latin America, with their L&P insurance market growth prospects, would provide greater opportunities in the long term
- There is a general trend toward expansion of onshore delivery as it allows for quality engagements with buyers.
- Output-based pricing continues to dominate the market; new-age models such as gainsharing are also witnessing increased interest.
- The annuities market constitutes more than 35% of the overall L&P insurance BPO market and has been growing at above the market average rate.
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.