North American Insurance BPO Market Study

A Deal Analysis
by Karen Monks,  Michael Fitzgerald, May 17, 2011
Operations/ Benchmarking
Global, Asia-Pacific, EMEA, Latin America, North America

Abstract

Celent looks at the recent activity in business process outsourcing in the insurance sector in North America.

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 based 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 a wholly-owned subsidiary of Marsh & McLennan Companies [NYSE: MMC].

Media Contacts

North America
Michele Pace
mpace@celent.com
Tel: +1 212 345 1366

Europe (London)
Chris Williams
cwilliams@celent.com
Tel: +44 (0)782 448 3336

Asia (Tokyo)
Yumi Nagaoka
ynagaoka@celent.com
Tel.: +81 3 3500 3023

Table of Contents

Executive Summary 

3

Introduction

5

 

Methodology

5

 

Limitations

7

 

Celent Tiers

7

The North American View

9

 

Key Market Trends

10

Detailed Analysis of Deals

12

 

BPO Client Profile

12

 

Deal Profile

13

 

Key Findings in the Deal Analysis

16

Analysis by Business Process

18

 

Billing and Payments

19

 

Channel Management

20

 

Claims Management

21

 

Contract Change / Renewal Management

21

 

Contract Issuance

22

 

Customer Service

23

 

Enterprise Services

23

 

Help Desk Service

25

Information Technology Management

26

 

Pricing / Actuarial / Data Analytics

26

 

Product

27

 

Sales

28

 

Underwriting

28

Deal Analysis by Provider

30

 

Sell Side Trends

31

Final Thoughts

33

 

For Insurers

33

 

For Providers

34

Appendix

35

Leveraging Celent’s Expertise

37

 

Support for Financial Institutions

37

 

Support for Vendors

37

Related Celent Research

39

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