North American Insurance BPO Market Study 2014: A Deal Analysis

by Karen Monks,  Michael Fitzgerald, May 29, 2014
Industry Trends
North America

Abstract

Celent looks at the recent activity in business process outsourcing in the insurance sector in North America and finds that although deal activity is up, overall deal values are down.

Farming out core business processes to third parties—which was once unthinkable—is now a primary part of many insurers operational strategy to cut costs and provide alternatives to dealing with older technologies. A new report, North American Insurance BPO Market Study 2014: A Deal Analysis, provides a North American perspective on the insurance BPO sector.

Using data provided by BPO providers, Celent estimates the growth of North American core insurance BPO market through 2017. The anticipated annual growth rate for this period represents a slight decrease from the last market study. Factors driving this estimate include: a drop in the average size of the life insurance BPO contract, flat life insurance BPO deal counts, and smaller more numerous P&C deals.

Similar to the 2011 report, the deal data reflects a North American market where deal characteristics vary according to line of business. Multi-line carriers enter into BPO contracts that are fewer in number and larger in value.  P&C insurers choose smaller, more focused deals. New account activity in the region has trended down in the last three years — a continuation of a trend seen in 2011.

“The North American Insurance BPO Market continues to grow at a steady, but moderate pace,” says Mike Fitzgerald, Senior Analyst with Celent’s Insurance Group and coauthor of the report.

“Life and annuity deals are predominantly platform-based solutions, driven by speed to market needs or direct channel distribution initiatives,” adds Karen Monks, Analyst with Celent’s Insurance Group and coauthor of the report. “Property & casualty deals are more tactical and driven by a need to address technology gaps or to move forward with digitization.”

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 operating unit 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

1

Introduction

3

 

Methodology

3

 

Limitations

5

 

Celent Tiers

5

The North American View

6

 

Key Market Trends

6

Detailed Analysis of Deals

8

 

BPO Client Profile

8

 

Deal Profile

9

 

Key Findings in the Deal Analysis

10

Sell Side Trends

11

Analysis by Business Process

13

 

Billing and Payments

14

 

Channel Management

14

 

Claims Management

15

 

Contract Change / Renewal Management

16

 

Contract Issuance

17

 

Customer Service

17

 

Enterprise Services

18

 

Help Desk Service

19

 

Information Technology Management

20

 

Pricing / Actuarial / Data Analytics

21

 

Product

22

 

Sales

23

 

Underwriting

24

Final Thoughts

25

 

For Insurers

25

 

For Providers

25

Appendix

26

Leveraging Celent’s Expertise

29

 

Support for Financial Institutions

29

 

Support for Vendors

29

Related Celent Research

30

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