The very backbone of insurance companies is the wholesalers who provide business in bulk as against retailers who have direct contact with the policy purchasers and bring in results in a trickle. This onerous responsibility gives the wholesalers a right to demand the best of services, the speed of services and optimized insurance back office support so that they can deliver outcomes in time. They are also accountable to retailers who have to offer the best of streamlined services to the insured with whom they are in direct contact so that they can increase their market share. Under such circumstances, it is but natural that wholesalers would want outsource insurance back office tasks
But first, what are the advantages that can be derived by insurance companies if they choose to outsource back office functions. The first is obviously to gain access to specialized services offered by outsourced agencies without having to invest heavily in infrastructures such as hardware, software and human resources. This cost savings can be woven into structuring new insurance schemes at competitive prices. Most importantly, outsourcing of non-core activities such as policy processing, claims and commission management and data processing enables insurance companies to focus on the core task of designing and structuring new schemes and policies.
Based on these factors, what are the benefits wholesalers would get if back office functions were to be outsourced –
Speedy processing – The reputation and credibility of insurance agents depend on the ability to deliver the best customer service and speed of operations is the crucial factor here. The most important requirement for wholesalers is policy processing. Their job does not end when they submit new policies to the company; they have to get back to the retailers with the processed policy in the shortest possible time so that they can be handed over to the insured. Hence all work related to verification, validation, and corrections in the policy in the policy document have to be done quickly. Outsourced agencies have systems in place that can ensure this.
Claims processing – This is another area that has a direct bearing on wholesalers. Claim processing is a lengthy and often complex process as details in policies taken out decades earlier have to be taken into account. But it is very important as an insured person takes out a policy on the premise that in the event of any untoward incident, nominees will have no problems in quickly getting the claims payment. If policy processing is delayed it directly impacts the credibility of retailers and by default the wholesalers. By outsourcing insurance back-office task to specialist agencies the claims processing is speeded up.
Commissions management – Wholesalers deal with hundreds of policy schemes of different insurance companies. Separate schemes have varying commission amounts payable and consolidating them accurately and making timely monthly payments can be a herculean task if insurance companies have to do it themselves. But when this is outsourced to those having expertise in this field wholesalers can be sure that their monthly remuneration will be accurately calculated and paid.
It is thereby seen that from the perspective of a wholesaler, outsourcing certain insurance back office jobs goes a long way in optimizing their overall efficiency and integrity.