Let's face it – Insurance Back Office Outsourcing today runs parallel in importance to the core activities of any insurance firm. The take off in this field had been slow to start with but over the last couple of decades there has been an exponential growth in the outsourcing business.
It has now reached a level where the very survival of insurance companies in terms of profitability and retaining the competitive edge rests largely on the extent of back office functions being outsourced.
Knowing how back-office insurance outsourcing can strengthen your insurance firm is therefore crucial and can be broken up into a number of segments. These are –
:) Knowing the benefits that will accrue from outsourcing
:) Knowing what functions to outsource that will optimize the process
:) Knowing how to choose a reliable outsourcing partner
:) Knowing how to ensure a seamless outsourcing process
It has to be kept in mind that there are pitfalls in painting the whole industry with a single brush stroke and it is preferable that you adapt the possibilities given here to your specific business environment and goals.
Benefits from outsourcing –
- The singular biggest advantage that you'll derive from outsourcing is the quality time that can be got to focus on core activities instead of getting tied down to routine mundane and repetitive tasks that do not require any executive discretionary powers. This will give you the leeway to add value to client services and get fresh business for quick growth and development. New launches, creating brand awareness of new products and schemes and crafting exclusive business strategies will add to your market share and growth. Don't get bogged down with data processing and commission payment to agents when outsourcing agencies can offer top of the line services in these fields.
- Cost savings is a huge advantage of outsourcing insurance back-office services. You don't have to invest in high end software and hardware for data processing or to maintain stringent data security systems. The onus for this is on the outsourcing agencies that have been in line with the latest technological advancements especially in installing data management tools and multi-tier architecture high speed mainframes. Use this savings to devise new schemes at rates that will give you a distinct advantage over the rest in the field.
Back-office functions to outsource –
- Almost all back-office functions in the industry sector are being outsourced today but don't go by generalizations. Weigh your options carefully and decide on you'd want to retain with yourself. However, data processing, forms processing, claims management and commission management should almost inevitably be outsourced as running these activities in-house will act as a drag on precious resources such as manpower, investments and crucially, expenditure for retaining high worth floor space to house these departments.
- If you are in the life insurance business ensure that you compulsorily outsource closed blocks that is, maintenance of insurance policies that have had their schemes discontinued long back but where the policies are still in vogue. Servicing of these defunct policies will act as a stumbling block for growth and development of your insurance business.
- Your objective should be to concentrate solely on core activities and that is devising new schemes and selling them to customers. Once a policy is sold, all related work such as verification, validation, processing and maintenance becomes a back-office function and should be outsourced. Do not be bogged down with routine and administrative tasks that do not test your skill sets.
Choose a dependable outsourcing partner -
- Why should this be important for you? Because the very success of your insurance back office outsourcing depends on this. Select a partner that specializes on insurance back-office activities instead of one that has a finger in every form of business outsourcing pie. Having an outsourcing agency work for you that has its business goals and objectives in sync with yours will help establish a close rapport and result in a successful and fruitful partnership.
- Evaluate the track record and experience of the outsourced company. Market reputation for delivering high quality and consistent results coupled with keeping strictly within stipulated time frames should be the benchmarks you should aim for before arriving at a decision in this regard. The credentials and financial stability to sustain a long term relationship and evaluating the ability to handle any scale of business that you might choose to outsource should be high on your agenda for choosing an outsourcing company.
Ensure a seamless outsourcing process –
- A degree of serious introspection is required as well as some background preparation before moving forward with the process. Have a top tier steering committee with executives drawn from different departments to search for a suitable partner. A report must be submitted after a lot of due diligence so that no surprises crop up after a contract is signed and work is allotted.
- Have a business plan in place that includes projections over the next 5 to 7 years of increases in business, expected changes in business scenarios due to fluctuating global trends and other industry related issues and factor them into the contract.
Have these... :) 8)
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