A Deal Analysis
by Karen Monks, Michael Fitzgerald, May 17, 2011
Celent looks at the recent activity in business process outsourcing in the insurance sector in North America.
May, 2011 – Recent economic events have, once more, put cost containment at the top of the insurer agenda. The combination of unrelenting pressure on expenses, vast improvements in networking and communication technology, and an increased appreciation for highly flexible business models has caused virtually all insurance carriers to explore multisourcing as an option for running their businesses. Farming out core business processes to third parties-which was once unthinkable-is now considered by many carriers to be a viable alternative.
A new report, North American Insurance BPO Market Study 2011: A Deal Analysis, provides a North American perspective on the insurance BPO sector.
“This report continues Celent’s BPO focus and updates and expands on previous research in this area,” says Mike Fitzgerald, Senior Analyst with Celent’s Insurance Group and coauthor of the report. “This year’s report looks at the entire insurance process using the ACORD Capability Model. This unique tool gives one a full view of what activities insurers are outsourcing.”
“In looking at the entire range of BPO services provided to insurers, we found that the average P&C deal involves fewer subprocesses than life/annuity/health contracts,” adds Karen Monks, Analyst with Celent’s Insurance Group and coauthor of the report. “Life/annuity/health and multiline deals are more ‘end-to-end’ and involve more activities.”
This report is designed to provide some context for discussion by establishing the current uses of BPO for insurance services in a concrete way, based on input from the companies providing services to carriers. Twenty-six firms submitted information about current BPO deals, including lines of business covered, annual value of the deals, number of full-time equivalents represented, and specific business processes performed on each client’s behalf. The result is a current market sizing for core BPO insurance services, an analysis of the state of the market, and a projection of what lies ahead.
Celent is a research and advisory firm dedicated to helping financial institutions formulate comprehensive business and technology strategies. Celent publishes reports identifying trends and best practices in financial services technology and conducts consulting engagements for financial institutions looking to use technology to enhance existing business processes or launch new business strategies. With a team of internationally experienced analysts, Celent is uniquely positioned to offer strategic advice and market insights on a global basis. Celent is a member of the Oliver Wyman Group, which is part of Marsh & McLennan Companies. www.celent.com