The international business and trade scenario today is not what it used to be in the recent recession period. However, it has still not reached the stage of yesteryears where there was always a crowd of smiling investors milling around the Wall Street Stock Exchanges. Margins are still low, recessionary trends have barely come out of the trough, and strict Government regulatory policies are in place. The economic outlook is not as bright as it should be, and insurance back office outsourcing can be a strategic move.
Given this situation, businesses are actively seeking ways to implement cost-cutting measures. Their goal is to maintain stability and ensure a balanced financial footing. A primary trend currently gaining substantial momentum is the outsourcing of activities unrelated to policy matters. These tasks, which do not demand constant supervision and tracking, are becoming increasingly popular in the corporate landscape. The insurance industry is one of the sectors that have taken the lead in this route, known as back-office tasks. By deciding to outsource insurance back-office work, the insurance industry has witnessed a great increase in ROI.
The financial benefits of insurance back office outsourcing have been simply amazing. They have set a benchmark for others to emulate. Back-office functions in the insurance sector primarily consist of non-core activities. These activities include claims management, commission management, data processing, and other mundane human resources and administrative functions.
What are the areas that have helped the insurance sector reach a level of financial stability –
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Focus on core activities – This is intricately linked to profitability. Outsourcing noncore tasks eliminates the need to hire manpower and set up the required infrastructure for catering to new businesses. This results in substantial savings. By diverting these savings, you can formulate new competitive schemes. This, in turn, allows you to pass on the low premium advantage to customers, thereby increasing market share.
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Rise in efficiency levels – Some back-office functions through routine and ordinary have a certain degree of complexity. For example, the calculation of commission to be paid varies according to the type of policy sold by the retailer or wholesaler. By opting to outsource insurance back-office tasks of this nature, highly qualified existing manpower can be better utilized for more crucial work. This includes policy management and marketing which has a direct bearing on hiking business turnover and by default profitability adding to the coffers of the insurance industry.
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Reduction in recurring expenditure – Back office functions can be extremely expensive to maintain and service. Overheads can be high especially in terms of allotting office space to accommodate increased business activities. Just spinning off the data entry section can save a substantial amount in costs. The company can then divert these savings to more productive core activities.
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Dealing with seasonal business fluctuations – As in all industries insurance business too has seasonal fluctuations. Deciding to outsource specific insurance back-office tasks affected by the sudden rise in business eliminates the need to utilize fresh resources. This helps cope with the increased demand more effectively. Outsourced agencies automatically handle this.
Also Read: 5 Useful Tips to Find a Successful Insurance Back Office Outsourcing Company
These are just a few of the points that prove that it is financially wise to reap the benefits of outsourcing Insurance Back Office Services. However, if you are looking for a reliable outsourcing partner, your search ends here at Insurance Support World. Since 2008, we have been optimizing business processes for insurers. For more details, contact us: [email protected] or +1 646-688-2821.
