4 out of 5 Insurance BPO Clients Want More Digital Enablement

HfS Research is in the final stages of primary research for its upcoming Insurance As-a-Service Blueprint report. This iteration places more emphasis on innovation, specifically the innovative use of emerging technologies to improve outcomes for core insurance operations. Interviews with insurance services buyers reveal that while several significant IT transformation projects are underway for the majority, the effects aren’t quite trickling down to the business operational layer yet. As a result, buyers expect to access new digital-driven operational levers through their service providers. The components we refer to as "digital" include the major emerging technologies impacting enterprises in varying degrees—social, mobile, automation, analytics, and cloud.

In our recently published report, Moving Insurance BPO Into The As-a-Service Economy, we surveyed 34 insurance services buyers on their expectations from their insurance BPO service providers. One of the most striking findings was the expectation for digital enablement.

An overwhelming majority of insurance executives (80%) believes that their BPO provider should embed digital capabilities in insurance operations, with 21% expecting significant expertise and execution.

Of note, only 12% of buyers don’t see any applicability of digital in insurance, indicating a maturity of digital concepts among enterprise buyers.

To illustrate the nature of change in service delivery, consider a major service area where service providers are trying to fulfill heightening buyer expectations. The New Business process starts from the point of attracting new customers and managing applications including data management, issuing quotes, underwriting and providing channel support. Service providers are partnering and developing homegrown solutions to increase the level of digitization and paperless processing within new business operations. With the help of solutions that use robotic process automation, cloud OCR and document categorization, insurance carriers can get improved straight through processing capabilities in their mailroom, scanning, document management and processing. Another example is underwriting automation and analytics, where service providers are bringing solutions that prioritize an underwriter’s work queues to focus on the most profitable customers (determined by analytics), and enable automation of underwriting for smaller policies. We also see insurance carriers make use of multichannel BPO support to acquire customers for new direct market products. One buyer recounted a solution that used analytics not only to match the best customer profiles for its annuities products, but also the best agents in the network suited to serve them.

The commercial models are the last piece of the puzzle that we see both buyers and service providers struggling to envision. Most of these digital enablement projects for BPO involve ambitious services buyers willing to take risks as their providers experiment and develop robust solutions to take to market. In the near future, insurance carriers may be able to procure solutions like New Business As-a-Service, paying a single fee calculated on outcomes for the process, which will include BPO support, embedded automation that drives faster and more predictable processing, and embedded analytics that improves decision-making. Buyers interviewed in our report (available for free download here) particularly expect actuarial and new product development, policy serving, claims, and customer care to be impacted by digital. This is due to strides already made toward tighter integration of customer data and in analytics to inform these non-customer-facing as well as customer-facing functions. So the journey to Insurance As-a-Service is a gradual one, with some parts of core insurance operations already in transition through digital BPO embedding.