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, there are strict Government regulatory policies in place and the economic outlook is not as bright as it should be.
Given this situation, businesses are exploring ways to initiate cost-cutting measures in an effort to remain stable and be on even keel. One of the primary avenues that are now very much in vogue and growing exponentially is the outsourcing of activities that has no direct bearing on policy matters and those that do not require constant supervision and tracking. This is what is known as back-office tasks and one of the sectors that have taken the lead in this route is the insurance industry. 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 and have been a benchmark for others to emulate. Insurance sector back-office functions primarily consist of such non-core activities as 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 –
Focus on core activities – This is intricately linked to profitability. By outsourcing noncore tasks there are huge savings as the need to hire manpower and set up the required infrastructure for catering to new businesses is eliminated. These savings can be diverted to formulating new competitive schemes and passing on the low premium advantage to customers thereby increasing market share.
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.
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 which can be diverted to more productive core activities.
Dealing with seasonal business fluctuations – As in all industries insurance business too has seasonal fluctuations. By deciding to outsource insurance back-office specific tasks that are affected by the sudden rise in business, the need to utilize fresh resources to cope with this rise in demand is eliminated. This is automatically dealt with by outsourced agencies.
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 Insurance Back Office Outsourcing.