Insurance BPO buyers seek to meet digital demands and control cost of compliance
DALLAS, October 1, 2014 — The global insurance business process outsourcing (BPO) market has grown steadily over the last three years to reach US$2.7 billion. Large buyer activity has plateaued as the market has matured, but significant traction from small- and mid-sized buyer segments will continue to drive market growth, with a compound annual growth rate of 16 to 18 percent forecasted over the next two years.
Insurance providers are looking to BPO to combat mounting pressures, such as:
- Macroeconomic challenges (e.g., low interest rates, low GDP rates, high unemployment);
- Regulatory changes, which are driving up the cost of compliance;
- Rising incidences of fraud; and
- The rise of the digital consumer (i.e., as demand for digital services increases, many insurers are challenged by low digital maturity, outdated legacy technology and lack of analytic capabilities).
“From the supply perspective, service providers are looking beyond simple processes like claims processing and policy administration and entering niche segments such as specialty insurance and reinsurance to define new avenues for growth,” said Rajesh Ranjan, partner and leader of Everest Group’s Business Process Services research program. “A particularly promising area of interest is analytics; by offering more sophisticated services in this area—such as predictive and prescriptive analytics—service providers are able to make top-line impact as well as bottom-line contributions for their insurance BPO clients.”
These findings and more are discussed in the report, “Insurance BPO – Annual Report 2014: In Volatile Times, Insurers Taking ‘BPO Cover’.” This report provides an overview of the insurance BPO market, including adoption trends across geographies and insurance segments, key solution characteristics, service provider landscape, and areas of service investments.
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High-resolution graphics illustrating the report’s key takeaways can be included in news coverage, with attribution to Everest Group. Graphics include:
- Analytics solutions have high impact to both top and bottom lines in insurance industry
- Insurers turn to BPO in the face of mounting pressures
- Insurance BPO going smaller