Financial Services Outsourcing and Services Targeting Key Insurance BPO Opportunities: NA and EMEA

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1 A Datamonitor report Financial Services Outsourcing and Services Targeting Key Insurance BPO Opportunities: NA and EMEA Targeting market growth Providing you with: Published: Sep-06 Product Code: DMTC1654 Analysis based on interviews with over 100 insurers from the Americas, Asia Pacific and EMEA. The research was completed in Q2 of 2006 Data based on a European and a North American insurance technology survey, each of 100 interviews Use this report to... Improve understanding of the insurance BPO market

2 Financial Services Outsourcing and Services Targeting Key Insurance BPO Opportunities: NA and EMEA DMTC1654 Introduction This report combines two briefs from the targeting key insurance BPO opportunities markets theme for Quarter 2, The market focus brief provides an overview of North American and European insurance markets, while the customer focus brief provides end user insight in terms of take-up, planned business process outsourcing and insurers' attitudes to BPO and offshore sourcing. The following components of the financial services outsourcing and services theme analyze North American and European insurance markets and provide end user insight in terms of takeup, planned business process outsourcing and attitudes to BPO and offshore sourcing. BPO in European and North American insurance (Market focus) Customer attitudes: Mapping insurance priorities to operations outsourcing objectives (Customer Focus) Insurance BPO (Databook) Key findings and highlights Overall outsourcing budget growth is slowing, but BPO continues to grow. Healthcare policy admin and claims dominate BPO market, but remains a US opportunity; while L&P policy admin BPO continues rapid growth, but lacks take-up outside UK and US. Nearly half of insurers currently use at least one BPO service, where claims and policy administration BPO will be among the fastest growing BPO areas. Reasons to buy Improve understanding of the insurance BPO market Understand the effect that outsourcing/offshoring is having on the insurance market Understand insurance sourcing strategies Contact us... From Europe: tel: fax: tcmarketing@datamonitor.com From Germany: tel: fax: deinfo@datamonitor.com From the US: tel: fax: ustcmarketing@datamonitor.com From Asia Pacific: tel: fax: apinfo@datamonitor.com

3 Sample pages from the report Financial Services Outsourcing and Services Insurance BPO Opportunities: NA and EMEA (Review Report) INSURANCE BPO (DATABOOK) Introduction This databook contains detailed information around the key areas of BPO in the insurance sector. The processes covered are healthcare payer, life and pensions, policy administration as well as horizontal processes such as CRM BPO, finance and accounting BPO, Human resources BPO and Supply Chain management. The data is displayed by line of business, country, regions and service type. Definitions All data is annual and refers to year end; Financial Services Outsourcing and Services Market value data is given In US$ in real terms, converted at a constant 2005 exchange rate. Insurance BPO Opportunities: NA and EMEA (Review Report) The following table contains definitions of the vertical industries covered in this databook: BPO AND SOURCING TRENDS IN INSURANCE (CUSTOMER FOCUS) Table 1: Definitions Sector: Insurance Healthcare Payer Life and pensions Private insurance based healthcare schemes Summary Process: Insurance BPO Life and pensions policy administration BPO and Healthcare payer claims processing The insurance BPO BPO area looks set to continue to provide vendor opportunities as the insurance sector is Source: Datamonitor reviewing its sourcing strategy and increasingly using offshore and outsourced solutions even in key insurance D A processes: T A M O N I T O R Nearly half of insurers currently use at least one BPO service - showing continued growth; Claims and policy administration BPO will be among the fastest growing BPO areas; Cost based benefits no longer dominate sourcing agenda; Eastern Europe, Canada and South Africa are the leading emerging Financial sourcing Services destinations Outsourcing for BPO and Services services. Insurance BPO Opportunities: NA and EMEA (Review Report) The analysis is based on interviews with over 100 insurers from the Americas, Asia Pacific and EMEA. The BPO IN EUROPEAN AND NORTH AMERICAN INSURANCE (MARKET FOCUS) research was completed in Q2 of The quantitative approach used in the research is reflected in the findings of the brief which are focused on demonstrating insurers current and future BPO take-up. Specifically the brief focuses on overall BPO take-up detailed to the individual service level, future outsourcing Summary Financial Services Outsourcing and Services Insurance BPO Opportunities: plans DMTC1654 and global / sourcing Published developments 08/2006 including changes in the destination country market as well as shifts in NA and EMEA (Review Report) the drivers and inhibitors for the adoption of global sourcing strategies. The insurance sector has been delivering strong results in 2005, but the focus on operational efficiency and the Datamonitor. This brief is a licensed product and is not to be photocopied Page 26 combined ratio remains strong. Insurers are looking to build on the financial success of the last year by investing in key areas with BPO services in particular being an area of interest in some countries. Results: life side outperforms and general insurers exercise strong underwriting discipline; Overall outsourcing budget growth is slowing, but BPO continues to grow; Healthcare policy admin and claims dominate BPO market, but remains a US opportunity; L&P policy admin BPO continues rapid growth, but lacks take-up outside UK and US. Results: life side outperforms and general insurers exercise strong underwriting discipline Life results are driven by investment returns rather than new sales as insurers look for growth opportunities Investment returns have been driving good results in 2005 for the life insurance sector as equity market performance has improved. While the case on both sides of the Atlantic, especially North American results have Financial Services Outsourcing and Services Insurance BPO Opportunities: DMTC1654 / Published 08/2006 been equity market driven in the last year. The sector is also making some progress in terms of regaining NA and EMEA (Review Report) consumer confidence and interest, although more work will have to be done to attract new customer and new Datamonitor. This brief is a licensed product and is not to be photocopied product sales. Page 16 On the European side, sales are stabilizing after a year that confirmed significant changes to the overall product mix. Across the Europe unit linked products have seen especially robust growth off the back of significant market improvements. The long term growth potential of the European sector seems assured as governments look to reduce public sector pension reliance with incentives for private and corporate pension schemes. The more saturated North American market has seen more moderate growth driven particularly by a steady demand for annuity products. Carriers in the region are particularly looking for faster growing opportunities, such as bancassurance distribution or, on the product side, equity indexed annuities, to mitigate the overall slow growth. While Datamonitor believes the market may become increasingly cost oriented as competition and margin pressure continues, the longer term view remains favorable in the North American sector. Financial Services Outsourcing and Services Insurance BPO Opportunities: DMTC1654 / Published 08/2006 NA and EMEA (Review Report) Datamonitor. This brief is a licensed product and is not to be photocopied Page 7 Request more sample pages...for FREE! From Europe: tel: fax: tcmarketing@datamonitor.com From Germany: tel: fax: deinfo@datamonitor.com From the US: tel: fax: ustcmarketing@datamonitor.com From Asia Pacific: tel: fax: apinfo@datamonitor.com

4 Financial Services Outsourcing and Services Targeting Key Insurance BPO Opportunities: NA and EMEA DMTC1654 Table of contents DATAMONITOR VIEW CATALYST SUMMARY METHODOLOGY EXECUTIVE SUMMARY Introduction BPO in European and North American insurance (Market focus) BPO and sourcing trends in Insurance (Customer Focus) Insurance BPO (Databook) BPO IN EUROPEAN AND NORTH AMERICAN INSURANCE (MARKET FOCUS) Summary Results: life side outperforms and general insurers exercise strong underwriting discipline - Life results are driven by investment returns rather than new sales as insurers look for growth opportunities - General insurance sector maintains combined ratio improvement through strong underwriting discipline Overall outsourcing budget growth is slowing, but BPO continues to grow - Strategy development in insurance IT: insurers move to enable growth, but keep tight rein on costs - Overall outsourcing budgets growth slows as insurers look for proof of business case - BPO remains key insurance services opportunity Healthcare policy admin and claims dominate BPO market, but remains a US opportunity - Healthcare insurance administration services is biggest area of BPO spending in the insurance sector - Vendor opportunities remain focused both in terms of processes and geographic take-up L&P policy admin BPO continues rapid growth, but lacks take-up outside UK and US - Business structures are changing as consolidators influence the market - Transformation is key to profitable growth in market BPO AND SOURCING TRENDS IN INSURANCE (CUSTOMER FOCUS) Summary Nearly half of insurers currently use at least one BPO Claims and policy administration BPO will be among the fastest growing BPO areas - CRM remains the most developed area in terms of advanced sourcing strategy Cost based benefits no longer dominate sourcing agenda - Key drivers for BPO take-up - Vendor selection criteria Eastern Europe, Canada and South Africa are the key emerging BPO sourcing destinations - Offshore outsourcing drivers - Offshore drawbacks: is there a threat to continued growth? INSURANCE BPO (DATABOOK) Introduction - Definitions Industry specific BPO in the insurance sector Horizontal BPO in the insurance sector APPENDIX TABLES Table 1: Definitions Table 2: Insurance BPO services by lines of business globally, Table 3: Total Insurance BPO services by region, Table 4: Policy administration BPO services by country, Table 5: Healthcare claims administration BPO services by country, Table 6: Horizontal BPO by region, 2006 Table 7: Horizontal BPO by service area, Table 8: Horizontal BPO by country FIGURES Figure 1: How are your IT and outsourcing budgets changing from 05 to 06? Figure 2: What are the benefits of business process outsourcing? Figure 3: What is your position towards outsourcing the following business processes?...overall outsourcing budget growth is slowing, but BPO continues to grow... Marianna Yakoubovska, Financial Services Outsourcing and Services

5 Figure 4: Nearly half of insurers currently use at least one BPO service, Q Figure 5: Insurance specific BPO looks set to grow fast over the next two years, but interest remains strong in key horizontal BPO areas Figure 6: Three of the top four areas of outsourcing in the insurance industry remain non-industry specific Figure 7: Insurers aim to focus on core competencies and to make their cost based more responsive to revenues by variabilising costs Figure 8: Geographic reach and technology leadership are the most important selection criteria Figure 9: What countries/regions would you consider most seriously were you to offshore any service? Figure 10: Cost and labor pool access are secondary drivers to language skills and government subsidies Figure 11: Bad PR and lacking government incentives are seen as the key downsides of outsourcing Figure 12: Insurance BPO services by lines of business globally, Figure 13: Total Insurance BPO services by region, Figure 14: Policy administration BPO services by biggest ten countries Figure 15: Healthcare claims administration BPO services by biggest ten countries Figure 16: Horizontal BPO by region, 2006 Figure 17: Horizontal BPO by service area, Figure 18: Horizontal BPO by biggest ten countries...nearly half of insurers currently use at least one BPO service - showing continued growth... Marianna Yakoubovska, Financial Services Outsourcing and Services

6 Financial Services Outsourcing and Services Targeting Key Insurance BPO Opportunities: NA and EMEA DMTC1654 Datamonitor: Your total information solution Datamonitor is a premium business information company helping 5,000 of the world's leading companies across the Automotive, Consumer Markets, Energy, Financial Services, Healthcare and Technology sectors. Our products and services are specifically designed to support our clients key business processes from corporate strategy to competitive intelligence. We provide an independent and trustworthy source of data, analysis and forecasts to improve these processes and ultimately, to help grow your business. Corporate Strategy & Business Planning Quality Data Make more effective strategic and business decisions Product Development & Commercialization Targeting & Influencing the Market Expert Analysis Accelerate delivery of commercial success Assess and influence your commercial and market environment HELPING TO GROW YOUR BUSINESS Market & Competitive Intelligence Future Forecasts Maintain or obtain critical competitive advantage Nothing speaks louder than our clients ACI Atos Origin Avaya Communications Blue Pumpkin BSKYB BT Bull Chello Cisco CMG Computer Associates Convergys CSC Financial Services Deutsche Telekom Diamond Cluster EDS Ericsson Eyretel France Telecom Gemplus Genesys Hewlett Packard IBM Infogrames Intel Intervoice KPN Mobile Manugistics Microsoft Mitel Telecom NCR Nice Systems Oberthur Philips S1 Corporation Samsung SAP Sega Setec Siemens AG Sonera Sony Staffware Sun Microsystems Sungard Telefonica Moviles Teleperformance Thales Thus Unisys Vivendi...89% of our clients use Datamonitor research to develop competitive intelligence... Source: Datamonitor Customer Research

7 Interested in this topic? This Outsourcing research stream, launched in January 2003, analyzes infrastructure, application and BPO opportunities across the financial services industry. It examines the IT services market across both systems integration and professional services with a particular focus on outsourcing. Use this research stream to understand the impact of business trends on IT strategies and IT spending trends, with resulting implications for vendor go-to-market strategies. Other reports available in this series BPO and Sourcing Trends in Retail Banking (Customer Focus) This brief looks at retail banking BPO spanning sector specific operations and horizontal functions, highlighting strategic development direction of individual market segments. The key drivers and barriers to outousrcing are also described. Published: Sep-06 Product code: DMTC1316 Outsourcing and IT Services in Financial Services Model (Interactive Model) Forecasts and analysis of financial services outsourcing services. Published: Jul-06 Product code: IMTC0016 BPO in European and North American Insurance (Market Focus) The insurance sector remains the most open FS sectors to BPO. The sector's use of BPO continues to expand with health insurance and life insurance process outsourcing generating the greatest vendor opportunity. Published: Apr-06 Product code: BFTC1300 Horizontal BPO in North American Financial Services This report looks at the outsourced central enterprise services of human resources outsourcing, finance and accounting outsourcing and procurement outsourcing. Published: Oct-05 Product code: DMTC1142 Global Sourcing in European and North American FS The new paradigm of a global sourcing strategy must allow the FSI to decide what to outsource, when to outsource it and how to leverage and manage the maximum cost efficiency from the host of global outsourcing options available. Published: Apr-05 Product code: DMTC1048 For more information about our products visit Subscribe to Monitor A monthly update of Datamonitor's new products, delivered to you by . monitor@datamonitor.com

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