Growth of 12-14% anticipated in 2017, driven by scope expansion; automation, blockchain and analytics ready to transform the industry.
The global property and casualty (P&C) insurance business process outsourcing (BPO) market continues to register high growth, attaining nearly 13 percent compound annual growth rate (CAGR) over the last four years to reach US$1.6 billion in 2016, according to new research from Everest Group. Everest Group expects the market to grow at 12 to 14 percent in 2017 as insurers face intensifying pressures on profitability.
The growth in the P&C Insurance BPO market is largely being driven by first-generation buyers—insurers who are outsourcing P&C insurance operations for access to technology solutions and cost reduction.
However, the market is also getting a boost from tenured buyers with more evolved expectations. These buyers are demanding value addition, including assistance in expanding their businesses, reducing time to market, getting higher customer mindshare and building multi-channel capabilities.
Service providers are responding by developing better solutions. For example, automation is being swiftly adopted, as its benefits include cost reduction, improved quality (reduced errors) and speed, higher compliance and enhanced security. In fact, Everest Group research indicates that robotic process automation (RPA) can yield incremental cost reduction from 15 percent for offshore operations to as high as 45 percent for onshore operations.
Another solution that service providers may soon bring to bear for insurers is blockchain, a disruptive technology that is expected to transform the way insurance operations run. Numerous insurers across the globe are currently evaluating and piloting blockchain in key P&C insurance processes such as premium collection, disbursement and subrogation.
In addition, many providers are augmenting their capabilities with analytics to deliver judgment-intensive processes, such as fraud detection/prevention, actuarial and underwriting services, customer experience management and marketing, and claims adjustment.
“Insurers are looking to service providers to move beyond the expected bottom-line impact to deliver top-line impact,” said Skand Bhargava, practice director, Business Process Services, at Everest Group. “By that we mean that insurers rely heavily on their service providers to bring in next generation technological capabilities to stay relevant and competitive in the marketplace. For example, service providers help insurers create and manage their digital presence, which is increasingly important today in addressing the ever-evolving expectations of tech-savvy customers and fending off competition from ‘InsurTechs.’ Another example is blockchain; service providers that facilitate successful blockchain deployments for their clients will be true transformation partners.”
Everest Group explores these findings and others in a recently published report: “Property and Casualty (P&C) Insurance BPO Annual Report — Embracing the Digital-First.” This report provides comprehensive coverage of the global P&C insurance BPO market, including adoption trends across geographies and buyer size, factors impacting the market, key solution characteristics, emerging trends and service provider landscape.
***Download complimentary report abstract here***
Other key findings: