Insurance carriers increasingly are turning to outside providers for platforms and services to help them grow and compete in a rapidly changing industry, according to a new research report published today by Information Services Group (ISG) (Nasdaq: III), a leading global technology research and advisory firm.
The 2021 ISG Provider Lens™ Insurance BPO Services Archetype report finds both Life & Retirement (L&R) and Property & Casualty (P&C) insurers have accelerated their digital transformations amid major disruptions caused by the COVID-19 pandemic. Providers of technology platforms and services are helping all types of insurance organizations increase their efficiency, improve customer experiences, secure their operations and compete with new market entrants.
“The pandemic has highlighted the need for insurance carriers to adapt to changing conditions and requirements,” said Paul Schreiner, partner and insurance industry lead for ISG Americas. “To maximize their success, insurers of all types are seeking partners for everything from point solutions to complete digital transformations.”
COVID-19 disrupted insurance companies by forcing a shift to remote work and causing sudden changes in policyholders’ needs, ISG says. For example, life insurance claims rose while auto claims fell, and demand for travel insurance policies plummeted. Companies at an early stage of digital transformation needed to spring into action, so many turned to BPO providers and third-party administrators (TPAs) for people, processes and technologies to help them navigate new conditions.
The same technologies and business approaches that helped traditional insurers cope with the pandemic are enabling these companies to meet current and future challenges, the report says. Digitalization is helping carriers address new regulations, increasing demand for personalized products, rising security threats and the exponential growth of data, and compete more effectively with newer, nimbler rivals, such as insurtech startups.
BPO providers and TPAs have been helping forward-looking insurers strategically adopt new technologies for several years. Most insurers are looking for ways to move into the cloud to reduce maintenance costs, test and implement new business models and tap into provider ecosystems. Cognitive and artificial intelligence (AI) technologies help companies automate processes, detect fraud and deliver better customer service. New analytics tools allow insurers to make better use of data for strategic decision-making, risk assessment and personalized services, and robotic process automation (RPA) can perform some repetitive tasks to reduce costs.
The 2021 ISG Provider Lens™ Insurance BPO Services Archetype report examines four different archetypes, or types of clients, that are looking for insurance BPO platforms and services. The report evaluates the capabilities of 15 providers to deliver services to the four archetypes:
Transactional Services Buyers: These buyers are conventional outsourcing customers seeking point solutions to reduce transaction processing costs. Rather than build up in-house expertise, they turn to providers of basic, rules-based automation and offshore labor to perform non-critical transactions and parts of insurance processes. A global presence, regulatory knowledge and a track record of compliance are the key attributes they seek in a provider.
Automation-Led Buyers: Buyers in this archetype implement more advanced automation technologies to enhance productivity efficiency and process accuracy. They use partners’ products or proprietary solutions, such as RPA, AI, chatbots and character recognition, to automate processes. Partners should help define the automation roadmap toward goals of higher productivity and quicker turnaround times.
Transformation-Oriented Buyers: These buyers are focused on digital transformation and develop collaborative relationships with providers to launch and carry out transformation programs. They want to adopt the latest technologies, including cloud platforms, RPA, IoT and cognitive systems. To improve customer experiences, these insurers are turning to AI for actionable insights and predictive analysis for better decision-making. Buyers in this archetype generally are not significantly burdened by legacy environments.
Holistic Solutions Buyers: This archetype covers buyers seeking a strategic, collaborative partnership to envision and implement end-to-end insurance services. They are mature and technologically savvy and turn to providers for cutting-edge solutions and frameworks to achieve a competitive edge. Providers should have strong insurance expertise to handle complex, mission-critical functions and help bring new products to market quickly.
Among the providers ISG evaluated, Cognizant, DXC, EXL, Genpact, Infosys and WNS are named as Leaders across all four archetypes. Accenture is named as a Leader across three archetypes, and SE2 a Leader for one archetype.
The 2021 ISG Provider Lens™ Insurance BPO Services Archetype report is available to subscribers or for one-time purchase on this webpage.
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