In the modern day, business scenario firms and companies are constantly trying to outdo one another and capture bigger and bigger slices of the market pie. This is especially true in the insurance sector where competition is severe and the management has to concentrate largely on new innovative schemes and policies to stay in the race. Under such circumstances, it is wise to focus mainly on activities that really matter for increasing turnover and profitability and spin off such tasks that do not have a direct impact on the sales efficiency levels to outsourcing agencies specializing in insurance back office support. These include but are not necessarily restricted to claims and commission management, policy management, administrative work like payroll management and of course the tedious data entry and processing activity.
In spite of the obvious advantages of outsourcing, a lot of care should be exercised before doing so. This is because there is a flip side too to parceling out backup activities and this can be gone through in some detail now.
Insurance Back Office Support Providers – The Pros
Savings in costs – There is a huge saving when back office services are outsourced. Investments in updating infrastructures such as hardware and software and recruiting personnel to carry out routine and specialized tasks such as data entry and claims management are all done by the service providers. These savings of the insurance companies can be utilized to offer competitive pricing in new products thereby bringing in more policyholders into the fold.
Greater emphasis on core activities – By outsourcing insurance back office services companies can focus on their core activities that are, devising new schemes and selling them. Insurance Back office Support providers have the experience and manpower with required skill sets to take care of almost all systems required in the insurance trade.
Coping with seasonal fluctuations – Like any industry, the insurance sector to faces seasonal highs and lows in business volumes. It is entirely the responsibility of back office service providers to take up the pressure in busy seasons, leaving insurance companies to take advantage of this period and focus on core activities for business growth.
Insurance Back Office Support Providers – The Cons
Data Security – This is the primary concern of insurance back office services outsourcing as reams of personal data of customers are at peril in case of hacking or breaking into systems by unscrupulous elements. Support providers might not be able to guarantee the same level of security of in-house processing by insurance companies. But it must be said in favor of providers that some do have the latest foolproof security measures incorporated in their systems.
Mismatched business objectives – Even though a support provider might have comprehensive systems in place to handle insurance back office activities, divergent business goals and objectives between the two entities often leads to gaps in communication and a lack of clear understanding of what is required from them. Not having a business philosophy and vision that is entirely insurance sector centric can affect efficiencies and output.
These then are some of the pros and cons of outsourcing insurance back office services to external service providers, something that the insurance sector will do well to note.