Insurance & Brokerage - White Papers

Insurance Outsourcing Trends in 2004

• Margins are shrinking and that will force more insurance companies to break with tradition and consider BPO to reduce operating cost.
• The growth of e-Insurance and virtual insurance companies require cutting-edge IT and emphasize the need to create outsourcing partnerships.
• Insurers will refocus on core competencies and, by outsourcing non-core functions, allow their back office to become somebody's front office.

What's Being Outsourced?
Cash reserves are being diminished to dangerously low levels. "Insurance companies pay out much more in claims than they take in premiums," explains Carolyn Gorman, vice president of the Insurance Information Institute, based in New York City. "They make up the difference through their investment gains." This is good for policyholders because premiums are low; however, when investments stop performing well, premiums are raised (known as a hard market) to make up the difference.

Obviously, in such a scenario, insurance companies need to concentrate on their core competencies:
- Writing new business,
- Merger and acquisitions, etc.

Outsourcing support functions allows INSURERS to concentrate their focus on activities that contribute to growth.

Insurance processes that are being outsourced are:

• Field-based services. Services performed over a large geographical area, including loss prevention and premium auditing.
  
  
• New Business Acquisition
  1. Inbound/Outbound Sales
  2. Intial Setup
  3. Case Management
  4. Policy Issuance
• Policy administration, maintenance and billing.
  1. Record Changes
  2. Audits & Re-instatement
  3. Accounts receivables
  4. Claim Over Payments
  5. Customer Service - Voice /E-mail
• Financial recoveries. This includes subrogation and premium (and overdue premium) collection.
• Data management (and analysis) and statutory and regulatory reporting.
• Claims Processing
  1. Claims Set Up
  2. Eligibility
  3. Duplication
  4. Account Settlement

Clearly, as 2004 approaches, insurance companies will continue to adopt more relevant business models. (One of the most obvious, made possible by the Internet, is the virtual insurance company.) Fierce competition, rapidly evolving technology, deregulation and the resultant spawning of more innovative insurance products, terrorism, and a volatile economic landscape all demand business solutions that surpass the capabilities of in-house staff. Insurance companies that are willing to take stock of their inadequacies, accurately assess their needs, and consult with outsourcing experts to ensure partnering with the right provider will be in the best position to not only survive, but prosper, in 2004 and the years to come.

In today's business, it's tough to be good at everything. Successful companies can gain efficiencies through economies of scale by hiring experts to perform outsourced business process and technology functions. With the accelerating rate of technology changes, many health plans cannot justify the expense or focus required to support technology departments. ContactSMT is all about freeing your organization from back office functions so you can focus on what you do best.

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