Research and Markets Report on Insurance Outsourcing Focuses on India
Dublin-based Research and Markets (http://www.researchandmarkets.com) has issued a new report on “Global Insurance Outsourcing – The India Perspective: Overview, Trends, Insights and Competitor Profiles.”
The report notes: “Insurance companies have traditionally been among the slowest adopters of outsourcing/off shoring. However shrinking margins, higher claims disbursement and increasing competition in recent years, especially post 9/11, have forced insurance companies to look at outsourcing/offshoring to improve efficiencies and channelize resources towards the core functions of product development and innovation.
“The sheer size of the insurance industry with over 1500 P&C insurance companies and 1300 health insurance companies in the US alone makes insurance outsourcing an attractive market. The success of the early adopters will determine future growth rates. Several niche providers with relevant domain expertise are emerging, encouraging insurance companies to outsource more value-added services.
“Some of the key drivers of insurance offshoring include:
— Cost saving
— Focus on core processes
— Speed to market
— Technology risk
— Better quality through specialized services
— Insurance regulation and statutory documentation in the US
— Deregulation of insurance markets
— HMOs move their processes offshore
— Availability of credible service providers
— Minimizing risk through multiple delivery locations
“Factors inhibiting insurance companies from offshoring include:
— Cultural differences
— Perception of loss of control
It also noted that “the banking, financial services and insurance (BFSI) vertical is among the fastest growing segments in the outsourcing industry and the Indian offshoring industry is particularly strong in this vertical. India’s BFSI outsourcing revenues in 2003 stood at $1.1 billion, which constituted 2.5 percent of global BFSI outsourcing, while its share of the overall global BPO market was only 0.41 percent. For the top 5 Indian vendors in the BFSI space, the insurance vertical accounts for 49 percent of revenues.
“India,” the report said, “has several advantages as a leading insurance outsourcing destination:
— Low cost advantage
— Established destination for outsourcing
— Indian companies offer near-shore services
— Indian IT outsourcers can leverage existing relationships with large insurers
— Indian vendors are expanding organically and inorganically to establish a multi-location presence, to de-risk their business
The report also “looks at the various insurance business processes that are being outsourced and how outsourcing is moving up the value chain. It examines the key drivers and inhibitors impacting the growth of outsourcing and offshoring in the insurance vertical. The report examines global trends, with an overview of recent outsourcing deals by some of the world’s largest insurers.
“It also examines key trends in the outsourcing industry and provides insights into issues like the insurance outsourcing value chain, domain specialization of vendors and offshoring versus near shoring. The report looks at the state of the insurance offshoring industry in India, market shares and prospects for growth, with estimates and forecasts till 2007.”