Executive Summary: ISG Provider Lens™ Insurance BPO Services and TPAs - Archetype Report 2021
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ISG Provider Lens™ Insurance BPO Services and TPAs - Automation-led Buyers - Archetype Report 2021
Advanced Technology Capabilities to Meet Changing Insurer Challenges
When the first cases of COVID-19 emerged in early 2020, the world changed considerably. Countries around the globe locked down their borders to prevent potentially infected individuals from mixing in with their population. While various regions dealt with the pandemic in different ways, most imposed some sort of lockdown, where individuals needed to shelter-in-place and keep themselves and their neighbors safe. And around the world, workers of all types, across industry verticals, stopped going to their offices and performed their jobs from home.
The pandemic impacted the insurance industry in many ways. Many carriers suffered dramatic business interruptions by shifting the workforce to a remote model. Agents could not meet in person with clients, and many lost sales. Sales in some categories like travel insurance plummeted as people stopped going on vacations and business trips. Life insurance claims soared. IT departments in many insurance organizations scrambled to quickly put the right processes in place to keep their internal workforces and distribution channels plugged in, both online and on-site.
Fortunately, the pandemic fallout wasn’t all gloom and doom. Claims in segments such as auto insurance reached historically low levels. Life insurance sales rose across demographics as the death toll due to COVID-19 complications exploded and individuals were forced to confront their own mortality. Carriers that were not far enough along in their digital transformation efforts and did not have adequate processes in place prior to the pandemic had to spring into action – or lose business. These carriers increasingly turned to business process services providers that offer various combinations of people, processes and technologies to help them navigate the new normal.
The good news is that the same technologies and approaches that insurance organizations adopted or beefed up during the pandemic will help them stay competitive and meet current and future challenges. Many life and retirement (L&R) and property and casualty (P&C) insurers are still constrained by complex and inefficient legacy environments that prevent them from operating efficiently. Others struggle to meet the needs of a digitally-savvy public for personalized experiences and individualized products. Other challenges revolve around talent attrition, increasing competition, changing regulatory requirements, data management and security threats.
Insurance organizations are turning to L&R and P&C business process outsourcing (BPO) service providers and third-party administrators (TPAs) to help them in several key ways.
Focus on growth: Growth is, has been and will always be essential to the very survival of every insurance organizations. Insurers are constantly focused on growing their market share, which has always been a challenge, but is more difficult today since carriers are operating in a more crowded playing field with more nimble InsurTechs and other new market entrants.
At the same time, insurers can look to develop and grow their offerings to stay relevant, provide advanced solutions to evolving issues, and help stay one step ahead of their competition. BPO services providers and TPAs can help carriers get established in new markets, develop new products and get them to market quickly, and reach their strategic growth objectives more quickly than if they tried to accomplish them on their own. In addition, many providers offer analytics and data management that can help insurers make sense of their data so they can gain insights to inform decisions.
Operate more efficiently: To grow their bottom line, carriers have to operate more efficiently. Optimizing efficiencies throughout the enterprise can help carriers cut costs and run leaner and meaner. BPO services and TPA providers can help carriers automate some processes or take over other processes completely, allowing the insurer’s personnel to concentrate on their core competencies and contribute more value to the organization. Some providers offer sophisticated analytics capabilities to help carriers harness the power of their structured and unstructured data for competitive advantage. Today’s providers come to market with a wide variety of offerings, ranging from point solutions to end-to-end solutions that can help carriers automate the insurance policy lifecycle and realize efficiencies across their enterprise.
Elevate customer experience: For insurers, customer experience has become a competitive differentiator. Carriers that can meet the expectations of increasingly demanding customers, who require every interaction with their insurer to be pleasant, efficient, intuitive and frictionless. Policyholders want to do business on their own terms, and have the ability to reach their insurer at any time, and via any contact channel, and they want self-service options as well. BPO service providers can provide carriers with the means to meet these demands, offering capabilities that allow insurers to create personalized and tailored experiences, facilitate customer-facing processes from applications to claims and enable omnichannel communications. Many providers offer technology to help improve the agent and broker experience, leading to better relationships and increased sales.
Focus on security: It can be uncomfortable for any organization to hand off important processes to an outside provider. Securing the very personal data involved in an insurance relationship is essential. However, most BPO services and TPA providers have developed security capabilities that can provide a greater level of security than carriers could attain on their own. Provider capabilities generally meet or exceed current regulatory data protection standards, so carriers can feel confident that their customer and business data stays secure. In addition, many BPO services providers and TPAs offer sophisticated fraud detection and data security technologies that help organizations proactively fight against fraud and cyberattacks.
Technologies That Help Drive Insurer Success
No doubt about it: insurance organizations accelerated digital adoption over the past few years, spurred on by the business impacts brought on by the COVID-19 pandemic. But even before the pandemic, digital capabilities had been critical to the success of insurance organizations. Digital brings a new world of functionality to carriers that helps them meet their most pressing challenges and success-defining objectives. Digital capabilities help companies make sense of their data and allows them to use information effectively for actionable insight. Digital tools and processes can help companies better understand what customers want – which is often a moving target – and help them meet the needs of existing and prospective policyholders. Digital can provide self-service options, speed the onboarding process and help agents and brokers do their jobs more effectively.
To truly succeed, carriers need to embrace and implement technologies in a systematic and strategic way. Today’s providers offer a wide variety of BPO solutions and TPA services, and most are constantly adding more functionality to existing products by acquiring companies, partnering with industry players and fine-tuning or adapting their solutions to better suit the evolving needs of their carrier clients. The most sought-after technologies for insurance organizations include analytics, robotic process automation (RPA), artificial intelligence (AI) and cloud, which are highlighted below.
Analytics: Data is both a blessing and a curse to insurance organizations. On one hand, there is an overwhelming amount of structured and unstructured data from numerous sources flowing into and out of the business, and carriers can get overwhelmed with the sheer volume of information. However, analytics can help insurers organize and leverage the data to make strategic decisions. Analytics can help carriers deliver personalized services to policyholders, proactively fight fraud, boost policy servicing, optimize underwriting and claims, and improve risk assessment.
Robotic process automation (RPA): Automating processes can boost efficiencies, save time, help achieve compliance and grow profits. Insurers can use bots to perform some of the repetitive tasks typically performed by humans like collecting data, thereby freeing workers to focus on more value-added strategic tasks.
Artificial intelligence (AI): Carriers are investing in cognitive and AI technologies to automate some of the claims handling processes and deliver better customer service. There are numerous processes that insurance organizations can improve with AI. Use cases include fraud detection and prevention, streamlined claims processing and faster and more accurate underwriting.
Cloud: Cloud is enjoying widespread adoption across the L&R and P&C insurance segments. Most insurers are looking for ways to move into the cloud and are carefully evaluating and considering providers’ cloud capabilities.
The cloud can deliver applications and solutions to meet a variety of business challenges. For example, cloud technology helps insurers reduce legacy maintenance costs and boost operational efficiencies. Cloud allows insurance organizations to test and implement new business models and technologies, increase agility and get products to market quickly. It also helps insurers innovate in new and creative ways. In addition, cloud helps insurers link to provider ecosystems, automate some functions, reduce costs and grow.
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