Turbocharge your Insurance BPO Eight ways to drive profitable growth by outsourcing

Transcription

1 Turbocharge your Insurance BPO Eight ways to drive profitable growth by outsourcing 1. Consolidate Platforms 2. Leave No Data Behind 3. Embrace Multi-shoring 4. Unleash the Full Potential of Advanced Analytics 5. Create Richer Customer Experiences 6. Improve Speed to Market 7. Embrace Labor Arbitrage and Flexibility 8. Stop Regulatory Pressures from Affecting Operations

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3 Introduction For more than three decades, insurers have embraced business process outsourcing (BPO) to reduce expenses and provide excellent service to their agents and customers. But, if an insurer is only using BPO to reduce costs, it might be missing out on an opportunity to help drive profitable growth. An Industry Under Increasing Pressure The past decade has not been kind to the insurance industry. The recent economic crisis has resulted in a dwindling of profits caused by, among other things, the declining financial performance of investment portfolios and a dramatic increase in the cost of complying with hardening risk and regulatory oversight requirements. This decline in profitability has resulted in an unending quest to reduce costs across the enterprise, cutting staff and placing many projects in a holding pattern until profitability improves. Insurers have also had to respond to changing consumer preferences, with many customers turning to digital and mobile channels, eschewing traditional agent channels for part of the sales process. This shift is more common among the young, but carriers have had to respond to the fact that 96 percent of consumers expect to be able to communicate with their insurer online, i and in the US, 54 percent of all automobile quotes are provided online. ii Not surprisingly, 84 percent of insurance executives agree that responding to these changes in consumer attitudes will be important or very important to their future success. iii These shifts in customer preferences shouldn t be overly problematic, but many insurers are finding their ability to respond to the market is being encumbered by aging legacy systems that are expensive to maintain and difficult to change. Insurers have had to decide whether to pull resources from ongoing IT maintenance projects to respond with new digital features or place the request on an ever lengthening IT priority queue. To further complicate the insurance landscape, newer competitors have appeared in recent years that do not face the same legacy technology hurdles and have quickly won market share from the older, less agile companies. In the US, technologically adept GEICO and Progressive provided 50 percent of all auto insurance quotes delivered online in iv All of these pressures combined have created a very difficult global business environment for life and property and casualty (P&C) insurers. Insurance companies looking for a way to address these challenges to achieve a competitive advantage should explore all the opportunities offered by business process outsourcing. 2

4 Strategic Insurance Business Processing To truly achieve all the benefits that outsourcing can offer, insurers need to broaden their concept of an outsourcing relationship. While it is fairly easy to reduce expenses by outsourcing certain operational functions, the real benefits come into play when the BPO provider becomes a strategic asset, working with the carrier to define a unique relationship that achieves certain business goals. In this section, we will discuss a few opportunities for insurers to turn BPO into a highly effective tool to achieve a competitive advantage. 2. Leave No Data Behind 3. Embrace Multi-shoring 4. Unleash the Full Potential of Advanced Analytics 1. Consolidate Platforms 5. Create Richer Customer Experiences 3

5 6. Improve Speed to Market 7. Embrace Labor Arbitrage and Flexibility 8. Stop Regulatory Pressures from Affecting Operations 4

6 1. Consolidate Platforms To many insurers, consolidating their stable of aging technology platforms, which often creates inaccessible silos of policy details, and customer data, is akin to a fantasy. The day-to-day maintenance of these systems, combined with necessary regulatory and rating updates, draws the bulk of their resources (including budgets) away from truly innovative technology reboots. Many companies are seeing the benefit of outsourcing some, or all, of their systems consolidation efforts to qualified BPO providers. Under this model, the company s IT resources can undertake the necessary maintenance and updates required, without losing resources to other products. Starting with a clean slate, and unencumbered by the legacy system, the BPO developers can design a completely new, componentized platform quickly and efficiently. When it s finished, the insurer can decide whether to bring the technology in-house and take charge of updates and ongoing maintenance or continue to outsource its IT operations to its BPO partner. Consolidating platforms with an outsourcing partner can have a dramatic effect on operational costs, processes, customer experience and, last but not least, an insurance company s balance sheet. Insurers that have rationalized their processing platforms achieved savings of up to 19 percent in operational costs and 25 percent in IT application and infrastructure costs. They also increased speed to market by as much as 35 percent. v In an age of increasing fiscal prudence, outsourcing platform consolidation provides insurers with a way to solve the legacy system conundrum without the need for substantial upfront investments in staff or IT infrastructure. 2. Leave No Data Behind In recent years, attempting to migrate old customer and policy data to a new platform has been a case study in anger management. Trying to assemble a staff to convert the data into a usable form, migrating the information to the new platform and then testing and ensuring quality control was expensive, resource draining and difficult. As a result, many companies chose not to convert their old data to the new system, losing the opportunity to obtain a historical and unified view of their customers and curtailing the ability to use the data for business intelligence and analytics purposes. Accenture identified this challenge several years ago and developed the Insurance Data Migration Factory (IDMF), a facility designed and built for one sole purpose to migrate data efficiently from the old systems to the new platform. The Insurance Data Migration Factory delivers a consistent and industrialized set of products and services it has more than 15 years experience during which it has delivered 85 complex data migration projects in the insurance industry. Not only does the IDMF offer a proven, predictable data migration service, it also allows insurers to avoid one-off infrastructure (hardware/software) and resources costs and associated risks. 5

7 3. Embrace Multi-shoring Although many insurance executives think of BPO centers as located in Asia and Eastern Europe, outsourcing comes in many different forms. Some outsourcing providers maintain centers throughout the world, offering different types and levels of service in each. Insurance companies can work with their BPO provider to develop outsourcing strategies and workflows. For some the best option might be to send standard administrative transactions to a lowercost center in India or Eastern Europe, while directing more complicated and premium-generating transactions to a higher-skilled resource at a contact center closer to home. By leveraging an outsource partner s global delivery network, insurers can incorporate best-of-class capabilities at competitive, flexible costs that are output and outcome based. 4. Unleash the Full Potential of Advanced Analytics The recent advances in modern analytics have the potential to change the insurance landscape. Savvy insurers are using analytics to identify and qualify the best leads, discover up-sell and cross-sell opportunities, sniff out potential claims fraud, gain more profound risk management insight, and much more. However, as many insurers know too well, the road to analytics nirvana is complex and fraught with risk. Building in-house capabilities takes time. It requires hiring difficult-to-find and highly paid employees, selecting the right software tools from a dizzying array of options, and customizing the technology to work within your business environment. BPO offers an easier path to ongoing analytics success. Outsource providers such as Accenture maintain an entire cohort of analytics talent, who can respond immediately to a company s needs. They already have a deep understanding of a number of powerful software tools, know the most efficient way to customize them to a company s needs, and understand how to take a company s business objectives and develop a successful campaign and ongoing, long-lasting changes to delivery models. An outsourced analytics solution provides the best of all worlds: highly skilled staff, powerful analytics tools and a dramatically shortened time to market on an ongoing, variable-cost basis. 6

8 5. Create Richer Customer Experiences Never have consumer s needs been more diverse than in this age of digital, mobile and social media. They expect their insurance company to provide experiences similar to what they get from their banks, online retailers such as Apple, ebay and Amazon, and credit card companies. Insurers have difficulty living up to these expectations, as establishing and maintaining multiple sales channels in addition to the complexity of running their day-to-day operations are creating more cost pressure. Fresh ideas are all but impossible to implement, due to the cost and complexity of their spider s web of technology platforms, and the drain on resources from constantly changing regulatory requirements. Any technology enhancement can only be accomplished if resources are pulled from another key area. BPO provides insurers with one way to sidestep many of these challenges, allowing them to deliver the rich experiences customers crave. By outsourcing application maintenance of both newer platforms and legacy systems, insurers in-house IT staff can focus on bigger, more strategic ideas knowing that whatever customer experience they decide to deliver, their day-to-day operations will not be compromised. 6. Improve Speed to Market The same challenges that encumber insurers attempts to improve the customer experience also negatively affect their ability to introduce new products and services quickly and economically. It is not uncommon for it to take years to bring new ideas to market, seriously impacting the company s ability to achieve a competitive advantage. BPO offers insurers an accelerator that can reduce the time it takes to develop and deliver products and services to market by leveraging shared investments in software, hardware and resources. The outsource provider can work with the insurer as a strategic partner, identifying the resources required to bring the idea to market and then using arbitrage to bring together a costeffective delivery team of qualified staff to achieve the desired timeframe. All of this can take place without jeopardizing the insurer s operations or service levels, providing it with a way to introduce new products quickly, responding to opportunities and reinvigorating its distribution strategies. 7

9 7. Embrace Labor Arbitrage and Flexibility Regardless of whether an insurer is looking to consolidate platforms, introduce new products or improve the customer experience, it can take a substantial effort to hire, onboard and train new employees, or transfer existing employees from other projects. To make matters more challenging, at the completion of the project, the employer has to worry about reassigning the staff or dismissing them. An outsource partner maintains a large pool of experts who can be assigned to a project as required, moving on to a new engagement once it has been successfully completed. This arbitrage can be used to assemble a team of skilled developers for a large application development project in a fraction of the time it would take to hire them internally. Companies looking to enter new markets can quickly and efficiently ramp up operations by drawing on trained resources familiar with the marketplace and fluent in the local languages. Insurers can also benefit from variable costing as staffing levels as staffing levels are efficiently reduced for closed books and other products that are winding down, and as only occasional customer support and policy maintenance are required. 8. Stop Regulatory Pressures from Affecting Operations Over the past few years, regulatory requirements have increased in number and complexity and there does not appear to be a slowdown in sight. Insurers have had to pull resources from other functions and hijack their finance department to comply with layers of complex regulatory requirements. Outsourcing risk and regulatory requirements may seem counterproductive, until you consider the benefits of accessing a pool of regulatory experts whose sole career is to understand regional and international regulatory requirements inside and out, and ensure that their clients remain in compliance. With the heavy-lifting removed from their day-to-day activities, insurance executives are able to consider the strategic opportunities that regulatory legislation offers, and return to their primary duties of running a successful insurance company. 8

10 Accenture BPO Accenture has a 30-year track record of helping financial services companies use outsourcing to transform their operations, increasing efficiency and enhancing their ability to achieve true competitive differentiation. This track record helped Accenture take first place in the International Association of Outsourcing Professionals Global Outsourcing 100 rankings five years running from 2008 to It is also the reason why analysts continually rank Accenture as the premier supplier for a range of niche BPO services, from procurement and HR services, to finance, accounting and advanced analytics. Accenture s 4,500 insurance and claims processing resources are helping more than 55 leading insurers achieve high performance through outsourcing. They handle more than 10 million transactions annually, administer more than 2 million policies, and provide pension fund administration to approximately 600,000 members. More than 60 million contracts have been migrated through our unique re-platforming capability, the Accenture Insurance Data Migration Factory. We work with the world s leading insurers to help them improve their processes, and we institutionalize this knowledge within the Accenture organization, creating a repository of proven business practices. Accenture has a range of proprietary software solutions such as Accenture Duck Creek Policy, Accenture Duck Creek Claims and the Accenture Life Insurance Platform which incorporate our extensive experience in insurance. We also have strategic alliances with major software vendors active in insurance, such as SAP and Microsoft. Finally, Accenture has well-established insurance BPO facilities in nine countries. Each provides clients with experienced insurance processing personnel and a one-tomany processing platform. Our global network of 26 client-facing processing units strategically located around the globe help our clients optimize their sourcing strategy through a combination of offshore, onshore and near-shore options. They can provide cost reductions of up to 50 percent by combining economies of scale, process optimization and labor arbitrage. 9

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12 About Accenture Accenture is a global management consulting, technology services and outsourcing company, with approximately 275,000 people serving clients in more than 120 countries. Combining unparalleled experience, comprehensive capabilities across all industries and business functions, and extensive research on the world s most successful companies, Accenture collaborates with clients to help them become high-performance businesses and governments. The company generated net revenues of US$28.6 billion for the fiscal year ended Aug. 31, Its home page is References i Accenture Consumer Driven Innovation Survey 2011 ii J.D. Power U.S. Insurance Shopping Study, June, 2011 iii Accenture Global Multi-Channel Distribution Executives Survey, 2012 iv Insurance Journal, Newer Sites Gaining Online Auto Insurance Share, March, 2011 v Accenture Platform Consolidation Survey, 2008 Copyright 2013 Accenture All rights reserved. Accenture, its logo, and High Performance Delivered are trademarks of Accenture