Out-Law News | 02 Oct 2014 | 4:47 pm | 1 min. read
Business advisors Everest Group said the global insurance BPO market was worth $2.7 billion in 2013 and that it expects the market to grow in value to as much as $3.6bn next year. The UK market for insurance BPO represents 47% of the total global market, Everest said.
"Insurance providers are looking to BPO to combat mounting pressures, such as: macroeconomic challenges (e.g, low interest rates, low GDP rates, high unemployment); regulatory changes, which are driving up the cost of compliance; rising incidences of fraud; and the rise of the digital consumer (i.e, as demand for digital services increases, many insurers are challenged by low digital maturity, outdated legacy technology and lack of analytic capabilities)," Everest said.
According to Everest's research, growth in the insurance BPO market is being predominantly driven by SMEs operating in the sector. However, Rajesh Ranjan of Everest said BPO providers are offering ever more sophisticated services to insurance companies that go beyond "simple processes" such as "claims processing and policy administration". Data analytics services delivered by BPO providers can benefit insurance companies, he said.
"A particularly promising area of interest is analytics; by offering more sophisticated services in this area – such as predictive and prescriptive analytics – service providers are able to make top-line impact as well as bottom-line contributions for their insurance BPO clients," Ranjan said.
The need to make better use of data is seen as crucial across many industries. In the insurance sector, many motor insurance providers have rolled out telematics solutions in an effort to personalise insurance premiums sold to drivers.
Telematics data is information that is collected about motorists' driving patterns and which is recorded via devices installed in vehicles. Analysis of the data allows insurance companies to set insurance premiums that reflect the driving style of motorists.
Earlier this year, price comparison website Moneysupermarket.com said it planned to sell more anonymised, aggregated "quote data" generated by customers of its site to insurance providers. At the time, specialist in litigation and compliance in the insurance market Iain Sawers of Pinsent Masons, the law firm behind Out-Law.com, said insurance companies should seek discounted access to that data to use to better inform their business decisions.
"The benefits insurance companies should look to gain may be in gaining discounted access to the data those price comparison sites have compiled, or alternatively through a reduction in the price they will pay those sites for customer referrals," he said.