Outsourced Insurance Support Case Studies and Offshoring Strategies

March 24, 2023
|By Gretel Digo
Content:
Case Studies

Insurance and Financial Services Firm Improves Customer Service through Outsourced Mailroom Services

A financial services company offering insurance products and banking services aimed to optimize its mailroom operations and reduce costs. With over 200 employees processing millions of mail and documents annually, the process was expensive. To address this challenge, the company partnered with an insurance outsourcing provider to create an inbound mailroom solution.

The client opted for an on-site mailroom to ensure security. The vendor’s employees were responsible for document scanning, data entry, indexing, and payment processing. To ensure a smooth transition and avoid layoffs, the provider worked closely with the client’s HR department. Employees affected by the change were given various options, including finding another job within the company, receiving a retirement package, or employment with the service provider at a 10% salary increase.

By outsourcing its insurance support, the client experienced improved customer service, retained experienced staff, and ensured adequate staffing levels. The provider also streamlined operations and reduced touchpoints, resulting in overall increased efficiency

Outsourced Insurance Support Case Studies (1)

Global Insurance Firm Slashes Operating Costs through Outsourcing

A global provider of life, health, and general insurance products wanted to improve service quality, people management, and profitability through the use of innovative but cost-effective solutions. The company was struggling with dropping customer satisfaction due to poor reporting and analytics. It wanted to establish a center of excellence (COE) driven by strong analytics to gain insights into its operations and improve claims and underwriting efficiency. The firm decided to work with an insurance service provider to address main challenges and achieve long-term goals.

After conducting an in-depth study to understand the firm’s challenges, the service provider created a new operating model for the center of excellence. The main goals of the service provider were to streamline processes, reduce overheads, introduce best practices, and improve compliance over three years using a four-phase delivery model. The service provider first set up a center of excellence composed of 60 percent offshore team members and 40 percent onshore staff.

Over the course of a year, the client managed to significantly reduce onshore operating costs by GBP 1.3M by outsourcing its Centre of Excellence (COE) to a low-cost location. This move allowed the client to standardize and consolidate processes that were previously disparate, resulting in better end-to-end accountability. Additionally, the client experienced improved quality of customer support through the implementation of better controls.

The offshore insurance support team demonstrated exceptional performance and was awarded the Customer Excellence award within the client’s general insurance department. The team’s commitment to providing top-notch support to customers contributed significantly to the success of the outsourcing initiative.

Australian Insurance Provider Cuts Claims Settlement Time by 35%

An insurance provider based in Australia faced multiple challenges. It wanted to increase debt collections, shorten the claims lifecycle, retain existing clients, and build a loyal customer base. The client decided to outsource general insurance debt recovery/motor claims recovery and dispute management to a third-party insurance support specialist to address these issues.

The service provider began by identifying inefficiencies in the claims life cycle that required elimination. The next step was to reorganize processes based on type and complexity to improve efficiency in a short period. To achieve project goals, team leaders and members with similar skills were delegated, and dedicated oversight for client interaction was deployed. The vendor’s use of Six Sigma best practices, sophisticated tracking systems, and workforce redistribution led to increased productivity, improved service quality, and reduced overall operating costs.

As a result of the outsourcing partnership, the client’s daily collection increased by 25 percent within the first year. Improved customer satisfaction resulted in a 35 percent reduction in claim settlement time, from 212 to 137 days. The time it took to send claims to the legal department was also reduced from 25 days to less than 2 days, representing a 90 percent improvement. Overall, the insurance support provider helped the client generate 5 percent of new business or about AUD 3.6 million within a year.

Insurance Support Outsourcing Case Studies & Strategy

Building an Effective Outsourced Insurance Support Strategy

Insurance companies today face numerous challenges, including regulatory and compliance issues, market volatility, and the need to adapt to emerging technologies. As a result, these companies seek innovative and cost-effective solutions to both old and new problems. Decision makers, stakeholders, and leaders challenge traditional business models and explore outsourcing, shared services, and other strategies to attain operational flexibility.

In this mature market, outsourcing insurance support services and core activities has become standard practice. Initially, insurance firms transferred responsibility for transactional, non-core activities to third parties. Today, insurers and service providers have moved on to higher-value services, but outsourcing support functions remain popular for businesses of all sizes. Many back-office and insurance support tasks are being outsourced to near- and offshore locations due to the benefits of labor arbitrage and economies of scale. However, onshore outsourcing of support functions is also common for companies seeking to protect their business reputation and access local expertise.

Some companies opt for staff leasing. This allows them to hire a team of professionals located in a different country to work exclusively for their company. Staff leasing provides the benefits of outsourcing, such as access to a skilled workforce at a lower cost, while also giving companies more control over their operations and maintaining their business culture. By leasing staff, outsourcing companies typically take care of all administrative tasks related to hiring and managing staff, including payroll, taxes, and benefits, freeing up time for companies to focus on their core business activities.

Identifying Support Functions is Ideal for Outsourcing

To develop a successful outsourcing strategy for insurance support services, it’s important to consider four key dimensions: ownership, location, coverage, and structure. The ownership dimension involves identifying whether the support service will be provided internally or externally by a third-party service provider. The location dimension involves deciding whether the support service will be based locally, nearshore, or offshore. The coverage dimension involves determining whether the outsourced support services will be domestic, regional, or global in scope, and the structure dimension involves identifying the number and type of support services that are ideal for outsourcing.

An effective outsourcing strategy starts with a process-driven assessment that uses decision criteria to evaluate how critical a particular support function is to the business, whether it can be effectively performed outside the organization, and whether it can enhance customer service quality. For example, a general insurance provider may use these criteria to determine whether mailroom services are best handled in-house, through a shared service center, or by a third-party insurance support service provider. By considering these dimensions and decision criteria, companies can make informed decisions and create effective outsourcing strategies that benefit their business.

Key Questions to Ask

Insurance support outsourcing should be seen as a solution to achieve business goals and not as an objective in itself. When deciding whether to outsource document management or customer support, for example, here are some key questions to ask:

  • • Is your business strategy constantly changing?
  • • Are you planning to expand into a new market? If yes, do you have the internal resources to operate effectively in the new environment?
  • • Is there a need for insurance support services during peak times?
  • • Do you consider insurance support a core or non-core activity?
  • • Do you need additional/fewer insurance support staff?
  • • Is your current technology helping you solve issues and achieve business goals?
  • • Is there a need for insurance support services during peak times?
  • • Are there technology and/or skill gaps that can be filled by an external specialist?
  • • Do the benefits of outsourcing outweigh in-house improvements?

Answering “yes” to any of these questions can help leaders decide whether insurance support needs can best be met through the use of internal resources or resources provided by an external party. Outsourced insurance support can be the perfect solution for a startup, an insurance firm entering a new market, an established company expecting rapid growth within a few years, or any company that lacks the capabilities to meet persistent challenges.

Guidelines for Successful Outsourced Insurance Support

After deciding to outsource insurance support functions, choosing an outsourcing delivery model is the next critical step. Your company can opt for a hybrid approach, keeping some support functions in-house while outsourcing only specific activities, or you can outsource all non-core insurance support functions to a provider. Most providers offer flexible solutions that allow clients to scale up or down quickly. Regardless of the model you choose, here are guidelines to ensure the success of your outsourcing strategy:

Prepare for Outsourcing

Allocate enough time and resources to plan and develop your insurance support outsourcing strategy. This includes conducting thorough research, selecting a provider, and transitioning to the new system. The more prepared you are, the smoother the outsourcing process will be.

 Plan for Additional Expenses

Outsourcing always entails investment, which can potentially reduce overall costs over the course of the partnership. However, the cost of outsourcing support functions can sometimes exceed the cost of running in-house processes. Plan for the cost of system integrations and upgrades and do not expect unrealistic savings, even if the provider offers the lowest industry rates for their services.

Monitor Performance

 Most insurance support providers monitor their own performance and issue reports to the client on a regular basis. However, this can be limiting and inadequate. To ensure the success of insurance support outsourcing, assign a team or top-level manager dedicated to monitoring vendor performance and compliance with service level agreements (SLAs). Defining and documenting clear objectives, responsibilities, metrics, and penalties/rewards are essential. Many outsourcing projects have failed due to a lack of oversight and poor performance monitoring.

By following these guidelines, you can help your organization achieve the benefits of outsourcing insurance support functions while minimizing the risks associated with such projects.

To learn more about outsourcing, you can read our Top 8 Qualities of an Outsourcing Company in the Philippines article. We invite you to follow us on social media and to visit our website to learn more about our services.

About Us: Sourcefit is a widely recognized US-managed business process outsourcing company based in Manila, Philippines. We proudly serve over 100 clients with a workforce of more than 1,300 employees. Our global centers can serve multiple markets, and our staff is highly proficient in English, Spanish, French, and Portuguese. Whether you need a few or many employees, we can help you achieve your business goals and build high-quality offshore teams.

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Sourcefit’s commitment to excellence has been recognized through numerous industry awards and certifications.

We recently received the Fortress Cyber Security Award from the Business Intelligence Group. Sourcefit was also honored with the prestigious recognition of Best Outsourcing Solutions Provider in the Philippines during the 2023 Business Excellence Awards.

Other awards include: FT ranking of 500 high-growth Asia-Pacific, The Marketing Excellence Awards, Inquirer Growth Champion,  HR Asia Awards, among others.

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