What Is Insurance Outsourcing?
A life insurance plan has always been touted as an investment for families and working adults. It serves as a bugger against unforeseen circumstances, protecting insured clients from significant financial loss. While most sectors have adapted to economic instability and other risk factors, the life insurance industry has not been the most fortunate as it struggles with cybersecurity, technological advancement, market changes, and shifts in compliance and regulations.
Thankfully, insurance companies are leveraging insurance outsourcing. Insurance outsourcing is a business strategy of hiring a third party to perform open and closed-book business processes to reduce costs, increase efficiency, and access specialized expertise. If you’re looking to supercharge your insurance company, now’s the perfect time. Below, we’ll tackle everything you need to know about insurance outsourcing.
What Are the Most Common Insurance Outsourcing Services?
There’s no limit to the business processes an insurance company can outsource to a business processing outsourcing (BPO) provider. However — to help you envision which functions are more readily available in the best BPO companies and insurance outsourcing companies — below are the most commonly outsourced insurance business functions.
1. Claims Processing
In insurance claims outsourcing, the service provider handles the entire claims process, from initial intake and verification to assessment and settlement. They also communicate with policyholders about claim statuses and manage disputes or appeals. Additionally, a business processing outsourcing company can process health, property, and other insurance claims.
2. Policy Administration
When outsourcing policy writing and adminstration, service providers process renewals, endorsements, and cancellations as well as manage the issuing of new policies. They also maintain policyholder records and ensure compliance with regulatory requirements.
3. Underwriting
With insurance underwriting, an insurance business processing company assesses risks, decides on insurance applications, sets premium rates, prepares documentation, and monitors existing policies for changes in risk profiles.
4. Fraud Detection
Specialized firms and insurance BPO service companies use analytics to detect fraud, investigate suspicious claims, report findings, implement fraud prevention systems, and provide staff training on fraud detection techniques.
5. Actuarial Service
External providers with insurance outsourcing services have actuarial analysts who develop risk models, calculate premiums, forecast financial performance, and offer strategic advice on product development.
6. Legal and Compliance
Legal and compliance officers in outsourcing providers handle legal issues, ensure regulatory compliance, and provide legal advice to minimize risks and meet industry standards.
7. IT Support
Third-party IT or tech support specialists manage infrastructure, develop and maintain software, ensure cybersecurity, and provide technical support to enhance operational efficiency.
8. Customer Service
Customer service agents in an outsourcing company handle inquiries, provide policy information, address complaints, and maintain high-quality support through various communication channels.
What Are the Benefits of Insurance Outsourcing
The business process outsourcing industry has been steadily expanding through the years, impacting most, if not all, industries in the market. Even more traditional industries like insurance are outsourcing some of their business functions, driven by reasons listed below.
1. Cost Savings
Like many other industries, companies in the insurance industry face financial pressure and need to improve cost efficiency to increase competitiveness and profitability. And the easiest way to reduce costs is by outsourcing insurance services.
By outsourcing, an insurance agency can leverage the outsourcing partner’s resources, paying only a flat rate while the outsourcing insurance services provider covers everything — including operations, benefits, paid leaves, management fees, etc. This helps an insurance company increase its cost efficiency.
The location of insurance outsourcing companies also influences the amount saved. When an insurance agency outsources to an onshore or nearshore agency, the company can typically save up to 10-20% on operational costs. If insurance services are outsourced to BPO insurance companies in the Philippines, insurance agencies can save up to 70% on operational costs.
2. Business Focus
Most insurance companies don’t have expertise in functions such as customer service, IT, and marketing. By outsourcing these insurance operations to insurance outsourcing companies, one can increase efficiency — freeing up time and resources and gaining more business focus.
3. Access To More Talent
The insurance industry is short on talent, according to ResroucePro. This problem is mainly due to people leaving the industry. As time passes, the job market is becoming younger. Not to mention, over 50% of those in the insurance sector are expected to retire in the next 15 years.
One of the ways insurance companies are filling gaps in their manpower is through insurance outsourcing. Many of the tasks performed in the insurance sector, such as customer service, IT support, and marketing only require general industry knowledge. Hence, these tasks can be easily outsourced for staff augmentation.
Meanwhile, more specialized tasks like claims processing, underwriting, fraud detection, and the like are more difficult to source, so insurance agents partner with an insurance outsourcing company that already has the talent available.
When working with Philippine insurance outsourcing companies, expect them to have a large talent pool so you can skip the recruitment process and only look at the profiles presented to you based on your requirements. Then, BPO insurance companies in the Philippines will train, onboard, and manage these outsourced staff for you, ensuring productivity and alignment with business objectives.
4. Scalability and Flexibility
While traditional outsourcing only supported basic roles and wasn’t designed to support long-term success, outsourcing has evolved to offer multiple engagement models and provide more flexibility to serve as business partners rather than mere service providers that help insurance companies scale and grow their operations.
5. Tech Infrastructure
The insurance industry has long been a more traditional industry, relying on manual processes and data analysis. However — as most outsourcing service providers have adopted more robust technological infrastructure and advanced technologies — insurance companies will find it easier to adopt new technologies and change their company culture with help from an experienced outsider who already has the resources and expertise to lead their transformation.
Outsource Insurance Services to the Philippines
With the growing talent shortage in the insurance industry, many insurance companies are pressed to find permanent solutions outside of staff augmentation and support their long-term goals.
KDCI Outsourcing is more than just a service provider. We’re an insurance business process outsourcing partner that works hand-in-hand with our clients to achieve their business goals. By finding hard-to-source talent that has the experience, expertise, work ethic, and cultural fit, we build excellent offshore insurance teams in the Philippines that seamlessly integrate with their operations and collaborate well with their in-house teams to ensure efficiency and success.
Learn more about insurance back office outsourcing services in the Philippines. Contact us today!
