While it is true that the bottom line is important for any company, it is also true that in the present global business scenario, it is not everything. A lot of emphasis now is being given on customer service, focusing on core activities only and spinning off to insurance outsourcing companies the work that has no direct bearing on policy and decision making. Outsourcing insurance services does have marginal cost benefits but more than that what matters is the releasing of time and man power from routine tedious administrative tasks to concentrate on getting additional business. The extra turnover and enhanced business growth more than makes up for any rise in costs (though a remote possibility) due to outsourcing.
What are the areas that can be said to contribute heavily to the benefits of insurance outsourcing, never mind the costs involved.
• Processing of old life insurance policies – This is unique and relevant to life insurance policies only. Generally the tenure of such a policy extends to the life term of the insured and once issued has to be continuously processed year on year until claim and maturity. Schemes under which these policies have been issued may have long been closed and discontinued but have to be kept open. Maintaining these policies is a drag on man power as well as computer disc space which can be better utilised by insurance companies for current policies. Giving these closed blocks for upkeep to an insurance outsourcing company is always beneficial irrespective of the costs.
• Opting for specialisation – No cost figure can be put on quality and specialist services. This is much sought after and readily offered by insurance outsourcing companies even though at a premium in case of top-end services. Insurance companies today allot tasks as per the area of expertise. Therefore all the eggs are not put in one basket and such activities as administration and payroll management or IT and data management or forms and claim processing are outsourced to companies with professional expertise in the respective fields. In the long run, delegating exclusive projects to separate insurance outsourcing companies might prove to be a costly affair but the top grade results received more than make up for it.
• Ensuring Data Security – In this age where hackers routinely find their way into data networks of even much touted data security systems of top corporations in the world, insurance companies have to be extra cautious when outsourcing data processing work. They are the custodians of personal data of their policy holders and any breach in security can have catastrophic effects. But taking care of data processing in-house is a cumbersome non-core activity and is best outsourced. Top end insurance outsourcing companies with fool proof data security infrastructure in place will charge more but this is one area where pricing factors are not taken into account. Data security is the prime concern – not saving on below par data processing companies.
It is thus seen that the very perspective and focus of insurance outsourcing has shifted from outsourcing for reducing costs to outsourcing to get top end high quality benchmarked services.