The insurance sector, for the past several years, has been seeing several changes across industries. Especially in a recent couple of years, most insurance lines have been in flux due to several reasons. Insuretech, data-driven operations, new entrants disrupting the industry and increasing competition, and the ever-changing and growing customer demands are a few factors contributing to the ongoing change.
Although some changes are positive or might result in positive circumstances and results, many are arising various challenges for insurers around the world. Let’s start by discussing some of the top challenges faced by insurance companies.
Top Policy Management Challenges Facing Insurance Companies
Policy management is one of the crucial processes of any insurance business and requires a team containing sufficient numbers of insurance professionals. Creating quotes, checking and binding policies, handling policy issuance and renewals, preparing loss run reports, etc. cannot be done by one person.
However, with Gen X employees retiring, there’s a need to attract millennials, which is difficult because they want to join a firm of their own choice. Many of them are typically looking for opportunities in companies with work-from-home or hybrid work cultures. This comes up as a huge challenge for insurers considering the volume of personal data they deal with. They will need extra data security measures in place to protect customers’ highly sensitive personal information.
This is one of the big reasons insurance companies outsource policy management services to nearshore or offshore firms offering insurance support services.
High Operating Costs
Insurance operations require time and effort – a lot of time and effort, especially in the case of policy management. Document review, policy checking, and other tedious tasks can drain one’s energy and may even lead to workplace burnout. Depending upon the level of difficulty involved and expertise required, insurance professionals are paid high salaries, increasing the operating budgets of the company. Apart from that, paperwork costs can also escalate if there’s a sudden spike in demand and increased customer flow.
Policy management as a process is very comprehensive and includes a wide range of tasks that are managed by different personnel or teams. For example, someone would be dealing with policy reviewing while some others would be generating proposals, and someone might be handling policy cancellation while someone else would be managing renewals. Most policy-related tasks are interconnected but dependence on different individuals and having multiple approval processes sometimes lead to inconsistencies causing delays.
Technology Utilization Struggles
Many insurance companies are still using legacy insurance systems simply because their staff is most comfortable with the same. Even if some companies invest in the latest, advanced technology for insurance operations, they face issues in using it with the best effect. Not being able to utilize technology is still a struggle for many companies and often comes up as a significant challenge they must find solutions for.
The above two factors play a key role in arising this challenge of holding on to customers. When there are delays, customers don’t think twice before deciding to turn to other insurers. For example, as an insurance business owner, if you delay a customer’s claim settlement, they might feel devalued which leads to dissatisfaction. Similarly, not being able to use tech in order to speed up processes and improve customer relations via optimal communication can lead to a risk of losing customers.
Insurance is a highly regulated industry and companies must ensure their operations and practices are up to the mark with compliance guidelines. Well, some policy management processes are so complex that sometimes a few things slip by through the loophole. This happens majorly due to overlooking some important aspects of policy management or lack of supervision – another big reason companies turn to professionally reliable insurance BPO services to ensure compliance.
The challenges discussed above are common across insurance lines but the question is can outsourcing be a good solution to meet them. Let’s find out.
How Can Outsourcing Policy Management Solutions Address These Challenges?
Qualified & Skilled Insurance Specialists Work for You
Outsourcing can turn out to be one of the best ways to bridge talent gaps. Yes, insurance outsourcing firms usually employ a large pool of skilled insurance specialists whom they regularly train to enhance their expertise. It ensures there is no stone left unturned when it comes to meeting your requirements. Your outsourced team of insurance specialists brings along special skills and experience that you might find difficult to find locally.
Save Considerably Well by Reducing Your Recruitment & Payroll Expenditure
By outsourcing your policy management services, you need not spend on recruitment and training, monthly salaries, and other perks/benefits such as insurance quarterly incentives, or bonuses. All you need to pay for is the work done for you. You would be charged on a per hour or per project basis and that cost would also be minimal as many excellent insurance outsourcing firms are operating out of developing countries where labor costs are low. This helps you take advantage of global labor arbitrage without putting much effort, saving a significant amount of your money.
Reduce Turnaround Times for Policy-related Functions
Most delays are caused due to discrepancies and errors. When you outsource some of the time-consuming tasks, you can rest assured that your outsourcing partner firm has quality audit procedures in place; they make sure to eliminate most errors/mistakes and reduce the turnaround time with a considerable effect.
Not only that, there might be time zone differences between your city and your partner’s geographical location. It means that the outsourced team will work for your company as an extension of your in-house team even after off-business hours, speeding up processes and smoothly running the operations round-the-clock.
Make the Best Use of the Latest Technology
Even if you have invested in the most advanced insurance technology but your staff is incapable of leveraging it, your investment would not bring enough ROI. Now you would need to pay more for their training. Instead, you can outsource policy management services and get support in utilizing insurance software and tools in the best possible manner. Your outsourced partner firm keeps its staff trained, making them experts at operating most industry-standard applications. They can surely help you make the best use of the latest software, bringing the best out of your tech investment.
Get More Time for Core, Value-adding Business Aspects
Policy management is a highly demanding process that requires a lot of time and effort. Outsourcing can relieve your staff of tedious and monotonous tasks and free them from other important functions that actually create value. Not only that, your outsourced partner will have a quality assurance process in place to minimize your supervision, saving your time too, which you can spend on other areas such as sales and client servicing.
Ensure Operational Continuity Regardless of Anything
The recent pandemic has made businesses realize that a sudden disruption can hit them at any time, resulting in operational mismanagement, shortage of staff, and a lot more. Likewise, many other challenges can arise out of situations like natural calamities that can put a halt on your insurance business operations.
If your region is hit with a storm making your city run out of power, but you have an outsourced team working round-the-clock for your company sitting thousands of miles away, you can rest assured about operational continuity regardless of what happens in your locality.
Considering the points discussed, it would be fair to say that insurance outsourcing can help you meet most challenges you are facing today. However, if you are seeking effective results from your outsourcing partnership, it is important to choose the partner wisely.
At ISW, we have been a trusted partner of insurance companies worldwide since 2008. Our team of qualified, skilled, experienced, and professionally trained insurance specialists are driven by innovative methodologies that help our clients optimize their insurance processes. We not only can uplift your operating capacity but also ensure higher performance and productivity, all while helping you reduce operating costs by up to 40%.