Outsourcing Delivers Expertise and Resources in a Transforming Industry
There is no doubt that the InsurTech movement has disrupted the insurance industry. Combined with a long list of emerging technologies, industry players are transforming themselves (which always puts images of Hasbro’s Autobots and Decepticons in my head) into digital companies.
InsurTech is a common term, yet often described differently by many. Some describe it as an overarching term (like I did in the above). Some use it to define types of companies. Some use the term to represent “any company using technology to disrupt the insurance industry,” and others say it’s “the technology that lies behind the creation, distribution, and administration of insurance business including smartphone apps, wearables, claims processing tools, and more. According to Novarica, there are four different types of InsurTechs: Analytics Arms Dealers, Beneficial Bots, Creative Carriers, and Digital Distributors. They state that Creative Carriers and Digital Distributors are heading to market with customized products and policies and often alternative pricing models.1
Insurer Startups, including Creative Carriers and Digital Distributors, are often running lean and mean with limited resources. They are offering tailored insurance products designed to disrupt the status quo in the market. In some cases, these products are underwritten by an incumbent insurer. In other cases, established insurers are partnering with or buying InsurTechs – including Analytics Arms Dealers, Beneficial Bots – to offer new capabilities and products and to take their organizations digital.
For any of today’s players, outsourcing can mean access to industry expertise and affordable resources to jumpstart an entrance into the market or to enhance the customer experience.
Access to Industry Expertise
Insurance is complex. Many InsurTechs are launched by technology experts, which can mean a lack of industry expertise. Even when an InsurTech has insurance experts on the team or when they backed by an incumbent insurer, there can still be a lack of internal resources with the right expertise to handle back-office processing or customer service. The same is true when an incumbent insurer adopts new technology to launch a new capability or product. By tapping into an outsourcing provider, they can gain access to expertise around new business, billing, or claims processing, or even find advice on their current technology landscape.
Affordable and Flexible Resources
For an InsurTech or any insurer, there can be much competition for budget dollars. Outsourcing delivers a cost-effective way to gain access to resources. For example, when entering a new market, the insurer can work with an outsourcing partner to support a new business rather than building the team within the company. Engaging an outsourcing partner allows the insurer to test new products in a low-cost way before ramping up a fully operational team internally.
From startups to mature organizations, there are normal business volume fluctuations. An outsourcing partner can bring scalability by providing extended hours servicing or managing policy, billing, or claims processing, and most often extends resources at a lower cost than hiring internal staff. Partners can create capacity for insurers by performing tasks, processes, and services, allowing insurers to dedicate their talent toward more strategic activities.
Enhance Customer Experience
There is an increased focus on customer experience (internal or external customers) for all insurers, and InsurTechs are often hyper-focused on it. Utilizing outsourcing to support customer experience initiatives is an excellent tool for any insurer. Whether tapping into industry expertise to build workflows or gain an outside view on business processes or technology changes to extending your customer care teams with licensed on-shore insurance professionals – outsourcing brings incredible value to your organization.
One thing that is clear today is that there are no signs of the industry slowing down in its transformation. Outsourcing delivers for incumbent insurers and InsurTechs (no matter how you define one) as a tool to continue to transform and meet the demands of today’s changing industry.