Globally, the insurance industry is grappling with multiple challenges. Low-interest rates, stagnating industry growth, and the increasing possibility of a global recession are putting real pressures on the insurance business. For example, the number of life insurance policies sold in the USA have declined in the past decade. In 2018, insurers sold 27.7 million life insurance policies in the country as opposed to 28.6 million in 2008. Creating customized solutions to meet customers’ growing needs, reducing the time-to-market for the latest products, and providing a best-in-class customer experience is imperative for the insurance industry.
In addition to grappling with business challenges, insurers have to deal with the usual challenges of finding skilled people for insurance processes, managing standard regulatory requirements, and dealing with decreasing profit margins. In such times, insurance back office companies can add a lot of value to insurers by streamlining their insurance processes. Let us understand how.
Enhancing Scalability in Claims Settlements:
Insurance back office process outsourcing can help insurers considerably in scaling up their claim processing volumes. In the context of COVID-19, scaling up requirements can vary by type of insurance line and coverage. For example, COVID-19 is reducing auto insurance claims due to reduced traffic and, thus, fewer accidents. In property, business interruption claims are expected to rise. Workers’ compensation is likely to go up in high-risk professions such as healthcare. Health and life insurance claims are likely to go up during these times.
Insurance BPO services can scale as per the growing needs of businesses. They have skilled resources in all service lines, thus giving them the flexibility to increase capacity wherever it’s needed. In particular, they can rapidly build teams of remote workers while ensuring full adherence to regulatory requirements. Furthermore, as part of scaling up, insurance back office process outsourcing can reduce manual procedures, thereby lowering operational costs.
As a part of this process, insurance back office support service would start by designing a new workflow to improve all aspects of claim settlements, such as case management, auto referrals, etc. Along with a new workflow, they will also adopt a checklist-based approach to ensure thorough compliance with regulatory requirements. Checklists also help in reducing errors and increasing the turnaround for each claim. Insurance back office support service providers can build dedicated quality teams to ensure error-free claims processing. Even a 1% reduction in claim processing error rates can result in savings of millions for insurers.
Along with global professional expertise, insurance back office support service providers have the right analytical tools which help insurers analyze their workflow and identify improvement areas. The use of smart business analytics and predictive performance models can lead to faster detection of issues, thereby reducing the chances of missing performance goals.
Streamlining Premium Collections:
The collection of premiums is one of the most important processes for insurers. Care needs to be taken so that the collection process is handled smoothly while ensuring positive customer experience. Managing premium collections is a highly labor-intensive task that requires a lot of precision.Insurance back office outsourcing can help set and manage the right set of customer metrics for the premium collection process. A focus on customer metrics can help improve process turnaround times and provide a consistent experience to customers.
Insurance back office outsourcing can also help automate processes and set up analytics to provide a big picture of all issues faced by customers. With this information, providers of insurance back office support services can develop customized solutions for top problems faced by customers. For example, a good data management system can provide easy access to customer information, thereby ensuring streamlined follow-ups for premium payments.
Technology can also help automate the invoice process, consequently reducing errors and increasing invoicing speed. It can also help in reducing labor-intensive work in invoicing, thus providing cost savings. Intelligent data analytics can also provide information on customers with high overdue and create targeted follow up campaigns for such customers.
By streamlining premium collections, insurance back office support services can help insurers reduce past due amounts significantly while enhancing the overall customer experience.
Overcoming Process Bottlenecks:
In the insurance industry, streamlined processes play a huge role in customer satisfaction. End customers do not appreciate the slow processing of insurance submissions and delays in providing quotes. Also, such delays increase the backlog of work of in-house staff. In particular, such delays cause a lot of damage to insurers’ reputation when there’s a surge in business volumes. All these lead to unsatisfied customers and overworked staff.
Insurance back office outsourcing help in overhauling the processes of insurers. Providers of professional insurance back office support services thoroughly understand the business operations and identify processes that are disintegrated from the overall operations. Based on their global experience in revamping insurance back office processes, they can improve the process flow and employ global best practices. Such changes can reduce insurance processing times significantly.
Insurance back office outsourcing also help in employing the right tools and technology. Insurance back office support service providers have experience in handling insurance processes at a massive scale. As a result, they are aware of the right tools and technology to bring efficiencies. In particular, they are well-versed in handling seasonal spikes in workload, as witnessed during the COVID-19 crisis. With a dedicated focus on operational efficiency, providers of insurance back office support services can substantially improve insurers’ profit margins.
Improving Claims Management Processes:
Every insurer wants to provide a seamless claims management experience to their customers. Insurance back office outsourcing help in improving the operational process of claims. Starting from the First Notice of Loss (FNOL) till the end clearance stage, outsourcing can help gain efficiencies at all stages. For example, FNOL is a key touchpoint in insurance claims processing. Typically, it’s a manual process that increases insurers’ operational costs while also increasing cycle time. Using professional insurance, back office support services help improve operational efficiency and faster claims settlement.
When insurers partner with providers of insurance back office processes, as a first step, providers will thoroughly understand the steps and variations in the current claims process. Subsequently, they will recommend ways to eliminate time-consuming steps in the claims handling process. Depending on the needs of insurers, insurance back office support service providers can build dedicated call center teams to interact with their customers.
Apart from setting up call centers for regular enquiries, insurance back office support services can also set up triage services for specific insurance domains. An example of triage services is providing auto insurance customers with information on car repair shops when faced with an accident. Such immediate attention and support at the time of need can significantly enhance the customer experience. Eventually, it can lead to positive word-of-mouth publicity as well as repeat business for insurers.
Optimizing Renewal Processing Services:
Often insurers face bottlenecks in processing policies at the renewal stage. Insurance back office support service providers streamline all insurance processes, including tracking renewals and sending timely reminders, evaluating risk aspects, preparing exposure summaries, and making the required adjustments to policy.
Insurance back office support service involves setting up tight processes to scrutinize each renewal. They create a standard checklist, which includes all essential steps like checking for accuracy, looking for any changes in deductibles/limitations, any coverage changes on renewal, etc.
Furthermore, processes need to be set to communicate the changes in renewed policies to the end customers. All the benefits should be illustrated to the end customers with care without any ambiguities. Any variances in the original and renewed premium should be recorded with care and sent to insurers for further review.
Increasing Overall Productivity:
As the business grows, insurers find it challenging to manage their employee productivity data. Growth in business leads to complexities in managing large amounts of data, a wide range of customer activities, and an increase in the number of processes. By outsourcing insurance back office support services, insurers can focus their core teams on the front end of their business. While insurers focus on their core processes, insurance back office support service providers deploy teams to meet all their back-office requirements. They can provide highly skilled people and provide productivity data regularly. Specifically, they can fix issues related to updating and managing massive amounts of data.
- Leverage Operational Excellence: The insurance industry is undergoing several structural challenges, which are going to impact their profitability. When it comes to implementing cost-cutting measures, there’s a huge gap between large insurers and the rest of the market. Small and medium-sized carriers have a tremendous opportunity to reduce their operating costs, beyond standard cost-cutting measures. BPO can help insurers leverage operational excellence to reduce their costs and improve their profitability.
- Provide Economies of Scale: One of the key differences between large insurers and the rest of the market is investments in IT infrastructure. While large insurers have the resources to make huge investments in IT, such luxury is not available to the rest of the market. BPO can help such players with a combination of low-cost locations and economies of scale, resulting in up to 20% of cost savings in operational expenses.
- Facilitate Continuous Productivity Improvements: Large insurers do not take ad hoc steps towards improving productivity and operational efficiency. They make systemic changes with a mindset of continuous productivity. On the other hand, smaller and mid-sized insurers don’t always have a long-term strategy for cost-cutting. BPOs can help such players create a long-term vision for cost efficiency and help instill a mindset of continuous productivity to achieve that vision.
While there are numerous advantages of insurance back office process outsourcing, listed below are a few prominent ones:
Save on Infrastructure Costs: Providers of insurance back office support services have world-class infrastructure, that too at low-cost locations. If insurers were to invest in their infrastructure, that would cost a lot of money. The best part is insurance back office services can be scaled rapidly at low-cost locations, unlike the USA and other high-cost locations.
Focus on Core Activities: Insurance back office process outsourcing can free up time and resources of insurers to focus on core activities such as business development and product and technological innovation. As a result, they can come up with innovative offerings and establish themselves as market leaders.
Minimize Workforce Costs: Insurance back office support service providers have specialist staff who are trained in diverse insurance processes. They provide the same quality of output and accuracy as in home countries. Insurers can save on their workforce costs in local currency on non-core tasks such as insurance data entry or claims processing. By outsourcing insurance back office support services, insurers get the dual advantage of high quality and low cost.
To conclude, these are challenging times for insurers. To deal with the new economic realities, insurers need to be at the forefront of customer-centric product innovation. There’s a tremendous opportunity for them to maximize their growth by outsourcing back office support services. In addition to saving costs, outsourcing can help insurers simplify their workflow, reduce errors, minimize delays, and improve the overall experience of their end customers.
What Makes Insurance Back Office Pro a Trusted Partner in Insurance BPO?
Insurance Back Office Pro has more than 10 years of experience in servicing insurance clients from all over the world. More than 50 insurance carriers, agencies, MGAs, and brokers rely on Insurance Back Office Pro to transform their critical processes and make them more agile and quality focused.
The team at Insurance Back Office Pro is well trained on providing end-to-end solutions across the insurance value chain, right from setting up a new business to managing billings and accounts. By choosing Insurance Back Office Pro as a partner for their insurance back office support services, insurers get access to state-of-the-art technology and highly skilled teams, resulting in reduced costs, improved time-to-market, and superior customer experience.