Outsource Insurance BPO Services: Why and How You Should Do It

Businesses seeking to thrive, not just survive, ought to consider the remarkable benefits of Business Process Outsourcing (BPO). Insurance firms can prioritize their revenue-driving operations by strategically delegating labor-intensive tasks while slashing costs. In this concise guide, we delve into the myriad advantages of insurance process outsourcing, examine the plethora of processes that can be outsourced, and present practical guidance on hunting down the ideal insurance BPO provider. 

In 2024, the market for insurance BPO services is expected to be valued at approximately USD 57.61 billion. This is likely to grow to over USD 83.70 billion by 2029, with a projected Compound Annual Growth Rate (CAGR) of roughly 7.76% from 2024 to 2029. These numbers are auspicious, especially for the U.S. insurance industry. They point to the American insurance industry’s increasing acceptance and use of BPO services, which can promote cost savings and operational efficiency. Insurance firms can concentrate more on strategic objectives, customer service, and product development by outsourcing non-core tasks.

Source: https://www.mordorintelligence.com/industry-reports/insurance-bpo-services-industry 

Advantages Of Outsourcing To Insurance BPO Services

One of the main benefits of outsourcing to insurance BPO services is cost reduction. Insurance process outsourcing allows you to focus on your core competencies while also helping access specialized skills and expertise that may only be available in some places. Here’s the whole list of advantages, 

• Cost savings: Outsourcing to insurance BPO services allows companies to focus on their core competencies as they now have the economic advantage of reducing labor and overhead costs.
• Access to specialized skills and expertise: Insurance BPO services provide access to specialized skills and expertise that may only be available in various ways. This can help insurance companies improve efficiency and accuracy in claims processing, underwriting, and actuarial services.
• Scaling operations: Outsourcing to insurance BPO services can help companies scale and increase their operations more efficiently. This is particularly useful for companies experiencing growth or expanding into new markets.
• Flexibility: Insurance process outsourcing allows companies to be more flexible regarding their services and processes. This can help insurance companies respond more quickly to changes in the market or customer demands.
• Improved customer service: Customer service functions such as call centers and online support, when outsourced to insurance BPO services, can help insurance companies provide customers with high-quality service. They will also be able to provide round-the-clock customer support that would be too costly to undertake in-house.
• Better fraud detection and investigation: When outsourced to insurance BPO services, customer service functions such as call centers and online support can help insurance companies provide high-quality service to customers. This can help them reduce their overall risk exposure, improve efficiency, and reduce costs.
• Improved focus on core business: Outsourcing non-core functions to insurance BPO services enables companies to focus on their core business operations and improve performance.
• Improved business continuity: By outsourcing certain functions, insurance companies can ensure that their operations continue during an unexpected interruption, such as a natural disaster or pandemic.

Top Services And Processes to be Outsourced to Insurance BPO

The efficiency of an insurance company can be significantly increased by outsourcing to an insurance business process outsourcing (BPO) provider. Claims processing, policy administration, customer support services, regulatory compliance, data entry and document management, and financial and accounting procedures are essential activities that are frequently outsourced. An insurance organization can concentrate more on its core competencies and strategic expansion by assigning these responsibilities to a reputable BPO.

Claims Processing

Insurance claims processing is evaluating, adjusting, and settling insurance claims. It involves a series of steps that insurance companies take to assess the validity of a claim, determine coverage, and process payments. The specific steps in the claims processing process may vary depending on the type of insurance, but generally, it includes, 

1. Receiving the claim
2. Verifying coverage
3. Investigating the claim
4. Determining coverage
5. Adjusting the claim
6. Processing the payment
7. Closing the claim

Underwriting

Insurance underwriting is when an insurance company evaluates a potential policyholder’s risk level and decides whether or not to insure them and at what cost. Underwriters use the information provided by the applicant and information from external sources such as credit reports and medical records to assess the likelihood of the applicant making a claim. Factors that may be considered include,  

• Applicant’s age
• Health
• Lifestyle
• Occupation

Based on this information, the underwriter assigns an applicant a risk level and sets the premium for their policy accordingly. Insurance business process outsourcing will have dedicated systems that can help streamline the underwriting process, saving insurance companies time and money.  

Actuarial Services

Actuarial services in insurance apply mathematical and statistical methods to assess and manage risk. Actuaries use a wide range of data and analytical tools to analyze the likelihood of events occurring and the potential impact on the company. They use this information to help insurance companies set prices for their products, design new products, and manage their overall risk profile. 

Tasks that you May Outsource to Insurance BPO Services Include:

• Calculating the probability and potential cost of claims being made
• Setting premium rates for insurance policies based on the likelihood of claims
• Developing and pricing new insurance products
• Assessing the financial impact of different types of risks
• Monitoring and analyzing claims data to identify trends and patterns
• Helping insurance companies manage their investment portfolios

IT Services

Insurance IT services refer to the use of technology to support and enhance the operations of an insurance company. This can include a wide range of services, such as: 

• Policy Administration Systems
• Claims Management Systems
• Underwriting Systems
• Customer Relationship Management (CRM) Software
• Business Intelligence and Data Analytics Software
• Cloud and Infrastructure

Overall, insurance BPO services aim to help insurance companies improve the efficiency and effectiveness of their IT operations. They also help companies be more data-driven and make better-informed decisions to better serve their customers. 

Customer Service

The goal of customer service in the insurance industry is to provide policyholders with the support and information they need to understand and maximize their insurance coverage. It also ensures that policyholders are satisfied with the services provided by the insurance company.  

Technology is increasingly being used to enhance customer service and make it more convenient and efficient for customers. Insurance companies can outsource insurance BPO services instead of investing huge sums in new technology. This strategy gives the companies the best of both worlds.  

Administrative Services

Administrative services in the insurance industry refer to the various support functions necessary to keep an insurance company running smoothly. They are an essential part of the insurance industry and are required to ensure the effective functioning of an insurance company. By outsourcing administrative processes to insurance BPO services, a company can strive for better efficiency and cost savings.  

Administrative services can include: 

• Policy and Claims Administration
• Billing and collections
• Customer service
• Financial management
• Human resources
• Compliance
• IT and data management

Fraud Detection And Investigation

Insurance fraud can take many forms, such as excessive losses, false claims, and staged accidents. It can also have significant financial and legal consequences for the insurance companies and policyholders involved.  

Insurance fraud detection and investigation are essential to maintaining the system’s integrity and protecting both parties’ interests. Outsourcing this aspect of the business to expert insurance BPO services can increase process efficiency and help save on expenses. 

Choosing A BPO Provider For An Insurance Company

There are also potential downsides to outsourcing in the insurance industry. These include loss of control over specific processes, the potential for poor communication and coordination between the insurance company and the outsourcing provider, and the potential for data security breaches.  

Insurance companies must carefully evaluate the potential benefits and risks and select the right partners before outsourcing services or processes. Here are some steps to help you choose the right provider: 

• Define your needs: Clearly define the specific tasks or processes you want to outsource and identify the skills and expertise you need from insurance BPO services.
• Research potential providers: Look for insurance business process outsourcing services with experience of working in the insurance industry and a proven track record of delivering high-quality services.
• Evaluate their capabilities: Evaluate the capabilities of potential insurance BPO services by looking at factors such as their technology and infrastructure, their experience and expertise, and the size of their organization.
• Check their certifications and compliance: Check if the providers are certified to handle data and have compliance with industry standards and regulations such as ISO, SOC2, PCI-DSS, HIPAA, etc.
• Assess their customer service: Consider factors such as responsiveness, communication, and flexibility to assess the quality of customer service offered by potential providers.
• Evaluate their security measures: Assess the security measures to protect your data and information.
• Look for references: Ask for references from other insurance companies that have used the provider’s services and ask about their experiences, including any challenges they faced and how they were handled.
• Consider the cultural fit: Consider if the provider’s culture and values align with your company’s values.
• Negotiate terms: Once you have identified a potential provider, negotiate the contract terms, including pricing, service level agreements, and timelines.
• Monitor and evaluate performance: After the contract is in place, monitor and evaluate the service provider’s performance regularly to ensure they meet the agreed-upon service level agreements and identify any areas for improvement.

Ready to explore the benefits of insurance BPO services for your business? Contact our team today for a no-obligation consultation to explore outsourcing solutions in the insurance industry. We provide insurance business process outsourcing that will perfectly meet your needs.