Tag: insurance

Life & Pensions Insurance BPO Market Expected to Grow 10-12 Percent as Political Climates Stabilize | Press Release

‘Outsourcing is one of the most effective options L&P insurers are pursuing to make their operations cost effective.’

The global life and pensions (L&P) insurance business process outsourcing (BPO) market will grow at 10-12 percent in the next few years, reaching US$2.3 billion by 2017, according to Everest Group, a consulting and research firm focused on strategic IT, business services and sourcing. As political environments in the US and United Kingdom stabilize, new contract signings are expected to experience revival. Also, contracts worth approximately US$450 million will be up for renewal over the next three years.

Amid political uncertainties in the United States (due to the presidential election) and the United Kingdom (due to Brexit), the year 2015 witnessed a lower number of new contract signings compared to 2014; nevertheless, the market continued to expand steadily, driven by scope expansion of existing contracts.

In the future, evolving buyer demands will shape the market as buyers seek more efficient operations—both for cost control and compliance reasons—and more sophisticated digital services for consumers. In response, service providers will differentiate themselves by offering efficient platforms for policy administration, strengthening capabilities around digital customer acquisition, and leveraging robotic process automation (RPA). (Everest Group reports that RPA can yield incremental cost reduction that can range anywhere from 15 percent for offshore operations to as high as 45 percent for onshore operations.)

“Outsourcing is one of the most effective options L&P insurers are pursuing to make their operations cost effective,” said Skand Bhargava, practice director, Business Process Services, at Everest Group. “Outsourcing also helps insurers strengthen their presence in the digital space in order to meet the demands of the modern-day consumer.

“Buyers are looking for one-stop solutions, so service providers with the capabilities to offer end-to-end coverage of the value chain will gain momentum. In addition, buyers are looking beyond just the bottom-line impact and are focusing on top-line performance. Service providers that can help buyers improve their top-line and act as business-transformation partners will remain differentiated in the market.”

These results and other findings are explored in a recently published Everest Group report: L&P Insurance BPO – Annual Report 2016: Breaking New Grounds.”

This research examines the global non-voice, third-party L&P insurance BPO market. It provides detailed analysis of market size and growth, solution characteristics, emerging trends and the service provider landscape.

Other key findings in the report:

  • North America and the United Kingdom continue to be key geographies in the L&P insurance BPO market, with the majority of growth coming from the North American region.
  • Increasing adoption of automation, along with higher adoption of platform-based solutions within L&P insurance contracts, is reducing the FTE-intensive play in rule-based processes such as policy servicing.
  • Providers are strengthening capabilities around value-added services such as RPA, digitalization and analytics via organic and inorganic routes.
  • Regulators across the globe have been enacting a spate of laws, thereby causing a massive upheaval in the insurance sector. Insurance companies need help in setting up the systems required to support compliance with these regulations, which creates an opportunity for insurance BPO providers.
  • Adoption of outsourcing continues to increase among small- and mid-sized buyers, driven by two key reasons: (1) small- and mid-sized buyers typically lack technology platforms for L&P insurance operations, and (2) small- and mid-sized buyers seek cost-effective solutions for running operations in order to remain competitive in the market.
  • Small- and mid-sized buyers now account for more than half of the contractual activity in the L&P insurance BPO market, both by the number of contract signed and by the average contract value (ACV) of signed contracts.
  • Policy servicing and reporting continues to account for the bulk of processes managed by service providers. Claims process remains the second most dominant portion.

Social Media-based Disruption is Even Hitting the General Insurance Industry | Sherpas in Blue Shirts

The general insurance (GI) industry has largely remained silent in a world where conversations either begin or end with the word “digital.” Products and services from the traditional GI providers have failed to keep tempo with the rapid technological developments happening everywhere else. One reason for this is that GI offerings are low-touch products about which customers interact with the provider just once or twice a year. Another is that GI providers have traditionally not focused on customer experience or value generation for their clients. They lag the Ubers and Amazons of the world by many miles.

However, the landscape has started to change recently due to the entry of disruptive start-ups trying to bridge the gap between service delivery and customer expectations. Areas gaining traction include price comparison services and mobile-based services. The real standout is peer-to-peer (P2P) insurance. It has gained more market buzz because the business model is not as opaque as the traditional model and provides clear benefits for the customers.

The P2P insurance business model
P2P insurance is a novel model facilitated by social media. Customers form their own online networks, and each pools in money to build a corpus. They allocate some portion of the fund to the mutual pool and pay the balance to a traditional insurer. When a claim must be made, members pull money from the mutual pool. If a claim exceeds the mutual pool corpus, they approach the reinsurer. If the claim is less than in the mutual pool, the remaining amount is distributed back to the members.

What are the benefits?

  • Risk reduction
    • There is less likelihood of fraudulent claims, as the small group of members who know each other share the risk
    • The members can select the risk level of their group, unlike in the traditional model
  • Non-operating cost optimization
    • Marketing and administration costs account for nearly 10-15 percent of policy premiums in the traditional model. These costs are nominal in the P2P model, as marketing is done by members personally. Hence, members pay less than usual premiums
  • Savings generation
    • Unclaimed insurance premiums are profits for traditional insurers. However, P2P insurance gives unclaimed money back to the members.

How does this disrupt the status-quo?
In the medium to long term, as this model gains maturity and acceptance, customers may switch to the P2P model. This will shrink the market share held by traditional players. Reduced demand for traditional insurance plans, coupled with increased supply, will drive down prices. Thus, customers are likely to benefit in the end.

Who are the current prominent P2P start-ups?
P2P Start Ups

These companies are the hot start-ups in this space for a number of reasons. First, they are the early movers that have leveraged cutting-edge technology tenets such as social media and mobility. Second, they are trying to tackle a real business problem and, in the process, are improving efficiency in the market. Finally, they are managing to raise substantial funding from prominent investors such as Sequoia Capital and Horizons Ventures.

An urge for innovation in the industry, coupled with high potential demand from the customers, will drive further disruptions in the GI market. Start-ups are likely to be the vanguard in this evolution, by introducing value generating products and services. Sooner than later, the traditional players will wake up to the new normal, and will try to catch up by either acquiring these start-ups or partnering with them. Ultimately, the end-customers will be the beneficiaries, as competition forces the prices down and innovation drives the quality of services up.

High Growth of Property & Casualty Insurance BPO Market Spurs Investment in Value-Added Services | Press Release

Healthy P&C Insurance BPO market has grown 17 percent since 2012 and is expected to grow 14 to 16 percent through 2017.

The global property and casualty (P&C) insurance business process outsourcing (BPO) market registered nearly 17 percent compound annual growth rate (CAGR) over the last few years to reach US$1.45 billion, according to new research from Everest Group. Amid political uncertainties in the United States (due to the presidential election) and the United Kingdom (due to Brexit), Everest Group expects the market to grow at 14 to 16 percent, reaching US$1.9 billion by 2017.

The growth potential of the P&C Insurance BPO market is highly attractive to service providers, but with over US$460 million up for renewals in the next three years, competition will become more intense. Everest Group advises service providers to differentiate themselves through specific value addition capabilities, particularly analytics, robotic process automation (RPA), and third-party administrator (TPA) capabilities.

  • Analytics: P&C Insurance BPO buyers are looking for a wide range of analytical capabilities, ranging from basic reporting-focused offerings to highly sophisticated predictive and prescriptive analytics solutions. Analytics solutions are particularly desired to address fraud identification and prevention. Fraudulent disclosures and claims amounted to 6 percent of total premiums in the United States in 2015.
  • RPA: P&C insurers are expecting service providers to offer RPA solutions that can automate rule-based processes. Automation solutions are being highly leveraged in claims processing as well as policy servicing and reporting, resulting in improved efficiency, faster processing, and higher accuracy. RPA can yield incremental cost reduction anywhere from 15 percent for offshore operations to as high as 45 percent for onshore operations.
  • TPA: Certain processes such as premium collection, claims adjustment and claims disbursement, particularly in the United States, require service providers to possess a TPA license for each of the states to be operational in. Service providers with TPA capabilities and relevant BPO experience will be able to offer end-to-end process coverage, including the complex pieces and therefore have a competitive advantage.

“Digitalization is another key driver that will impact this market,” said Skand Bhargava, practice director, Business Process Services, at Everest Group. “P&C insurers need to respond to the strong and growing consumer preference for digital channels, and most will turn to service providers to help them build multi-channel capability and improve time to market with these digital products and services. Digitalization is one more example of how service providers are progressively managing a larger part of the P&C value chain, far beyond claims processing.”

These results and other findings are explored in a recently published Everest Group report: “Property and Casualty Insurance BPO – Annual Report 2016: The Dawn of Transformational Era – Adapt and Evolve to Succeed.” This research examines the global non-voice, third-party, industry-specific P&C Insurance BPO. It provides detailed analysis of market size and growth, solution characteristics, emerging trends and the service provider landscape for the market.

Smart Contracts Use Cases | Market Insights™

smrt-cntrcts-use-cases

Smart contract, a complex set of software codes with components designed to automate execution and settlement, is the application layer necessary to make blockchain technology a reality. Although smart contracts technology is in its infancy, use cases are evolving quickly.

For a detailed analysis of these use cases and more details on smart contracts, please visit the report page.

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