Heightened requirements around security, privacy, partnership risk and operating risk are pushing insurance firms to take a more proactive approach for managing compliance issues. Because of these new laws, outsourcing of many paper-intensive processes is expected to increase.
There continues to be a growing gap between consumer need and available insurance products / solutions forcing carriers to make tough calls on where their resources should focus between client servicing (RTB) and new product development (CTB). In addition, by 2018 25 percent of all insurance professionals are expected to retire, resulting in a shortage of skilled workers.
With companies narrowing the processes they define as ‘core’, more industry-specific processes are available for outsourcing and require industry-specific solutions. ISG is working closely with insurers to identify non-core business functions that are important part of delivering solutions across the entire insurance value chain.
To overcome the challenge of tight profit margins, many insurers are making investments in technological solutions to improve their front-end sales, distribution and customer service, while enhancing their back-end operational efficiency and expense management.
The way consumers make decisions today has changed drastically. Most compare prices, deals and reviews online before their actual purchases. Subsequently, insurers are increasingly investing in digital platforms to strengthen their relationship with customers across all products. Customer-facing tasks like billing and payments, claims management, etc. are being digitized at a dramatic pace.
Telematics—the integration of mobile communications, vehicle monitoring systems and location technology—is changing the auto insurance industry. The technology allows insurers to track user mileage and behavioral information, and link/charge individual insurance premiums more accurately. Insurers can also estimate accident damages by analyzing data such as hard breaking and speed. Telematics insurance variations include Pay-As-You-Drive (PAYD), Pay-How-You-Drive (PHYD), Pay-As-You-Go, and Distance-Based Insurance.
Spending on modernizing policy administration systems and other core systems continues with more decisions to buy versus build. Outsourcing pricing vectors headed in downward trajectory as service providers tool-up their automation offerings. Cloud providers are encroaching on traditional outsourcing providers as cloud adoption sees a large uptick.
Advances in data analytics have enabled insurance companies to extract detailed insights on customer lifestyle and behavior. Increasingly, insurers are seeking niche service providers that can offer analytics solutions to sharpen their market segmentations strategies and help reduce ‘fraud claim’ instances.
There are many different reasons why companies engaged in Multi-Sourcing over the last couple of years: Strategic Considerations Agility and flexibility Better alignment to differing business models Best-of-breed focus Introduce competition Internal Capabilities Delivery limitations of organizations Maturing sourcing and service management expertise Market Dynamics Trend away from Single-Supplier mega deals Intense competition Advanced service delivery options
ISG‘s prediction is that due to market trends like social media, cloud, etc. sourcing will be confederated, hence sourcing will be focussed on IT and business functions rather than towers.
Both, Multi-Sourcing and Confederation bring new players, more automation, provide room for XaaS solutions and require Service Integration.
Ray Shehata as SME, as of July 2013 – Updated 2014-07-28 by Liza Zachariah
If you are wondering whether the cloud is encroaching into the traditional data center outsourcing space – consider this: the CIA has commissioned Amazon to build a custom cloud. It is difficult to imagine a business more paranoid about control than CIA. And CIA beat traditional services behemoths to get the deal. The RIM story is under threat.
Cloud providers have gone up the stack into managed services and application infrastructure. Few traditional service providers can match the scale and the level of automation cloud providers afford. Maybe IBM can. Theirs will be a difficult proposition to match.
Stanton Jones as SME as of November 2014 (design update 2015-02)
Information Services Group is a leading technology insights, market intelligence and advisory services company, serving morethan 500 clients around the
world to help them achieve operational excellence. ISG supports private and public sector organizations to transform and optimize their operational
environments through research, benchmarking, consulting and managed services, with a focus on information technology, business process transformation,
program management services and enterprise resource planning. Clients look to ISG for unique insights and innovative solutions for leveraging technology,
the deepest data source in the industry, and more than five decades of experience of global leadership in information and advisory services. Based in
Stamford, Conn., the company has more than 800 employees and operates in 21 countries.
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