Outsourcing is the magic mantra in today’s business scenario and nowhere is it more relevant than the insurance sector. The reasons behind this are not too difficult to fathom. The total insurance business is a vast mix of various functions with most being supportive services propping up the core activities. The primary activities of this sector are devising new schemes with competitive pricing and strategies to increase market share. Other than these, all can be clubbed into back-office functions – administrative and payroll management, commission management, claims management, data entry and processing, and even policy management which help give direction to the outsourced company on operational modalities.
Two questions crop up in this context – why should you opt to outsource a big part of the insurance process and if you do, what are the factors that are to be considered for choosing the right insurance outsourcing company to maximize ROI.
Answers to the first question are not difficult to find out. By outsourcing the tedious and repetitive functions that are all standardized and do not require any discretionary decision making, you are getting time to focus on core activities. Highly qualified manpower need not be diverted to work in areas like data entry and processing that require no special expertise apart from having the technical knowledge to run the systems. They can be better utilized for devising new schemes and product launches, in fixing competitive pricing and marketing them. This also results in huge savings as there the need to invest for setting up an elaborate infrastructure network to cater to these functions is eliminated.
The second question regarding the aspects to be considered before zeroing in on the right insurance outsourcing company for maximizing ROI is a bit more complex and should be finalized after a lot of thought. However, they can be broadly classified under three factors –
Check the Business goals and objectives – An outsourcing company has given the many functions it carries out on your behalf should be treated as an extended arm of the parent company. It is thus imperative to ensure that there is a degree of matching of business goals, objectives and working philosophies between the two. The outsourcing agency might have the required infrastructure and systems to cater to the needs of the insurance industry. But if there is no understanding and clear communication between the two companies on how best to get things done the outsourcing process will not be optimized and will not deliver peak expected results. Check out whether the policies of the agency are insurance-centric and whether they truly understand the exclusive needs of the sector. Before signing any contract, have a formal discussion with these executives and put all your cards on the table.
Check for track records and experience in the insurance sector – Insurance outsourcing per se cannot be compartmentalized. One outsourcing company may need to cater to the needs of various sectors and industries to remain economically viable in its operations. These might be IT, ITES or BPO services too. Hence it is essential that you evaluate their credentials and check their experience in the insurance outsourcing business. Verify the number of years of experience that they have in dealing with the insurance sector. A sure of knowing this is to ask for and evaluate their past and running projects related to insurance. Compulsorily assess whether those are on the scale of what you will be outsourcing. Most crucially, ask for proof of the security measures that they have in place. You’ll be outsourcing a lot of data entry and processing work so ensuring their safety is critical to you and your policyholders. Knowing that the insurance outsourcing company has the required infrastructure in place is having half the work done.
Check the credentials and financial standing of the company – With a financially strong and stable company, you can safely enter into a long term contract. Such a company will be investing at periodical intervals to strengthen and update existing systems and infrastructure. You’ll greatly benefit from it in terms of speed and accuracy of services delivered to you. However, it is not enough to check merely the fiscal stability of the company, check for credibility and market reputation of the owners and promoters. This usually rubs off on their company.
These are just a few pointers to guide you on choosing the right outsourcing company for your insurance business which you can broadly rely on for better ROI. Ultimately a lot will depend on your gut feeling in the matter before signing a contract.