Partnering with a specialized Business Process Outsourcing (BPO) firm in the insurance industry offers a strategic pathway to streamline operations and redirect internal resources towards more impactful tasks. For leadership teams in insurance companies, understanding the optimal timing for leveraging external expertise is a pivotal decision.

A successful BPO partnership in 2024 isn’t just about subcontracting tasks; it’s about aligning your firm’s culture, expertise, and technology with a provider that complements your strategic goals. When done correctly, the benefits can be impactful—ranging from improved operational efficiencies and cost reductions to unlocking various other competitive advantages.

Learn about Covenir’s industry leading ONSHORE Insurance BPO Services.

To make an informed decision that’s right for you, there are a few key factors to consider. Let’s explore this in further detail to help you identify the opportune moment to seek out a BPO partner.

Benefits to Using Insurance BPO Services

Insurance business process outsourcing (BPO) refers to the practice of outsourcing a portion of insurance operations to an external team. These teams can be onshore or offshore, and BPO providers typically have a specific area of expertise such as claims processing, customer support, underwriting, or other essential workflows.

A myriad of benefits come from leveraging an insurance BPO provider and a growing number of insurers today are beginning to see how such a strategic partnership can help them stay ahead in the ever-changing insurance market.

Here are some of the top advantages that insurers may find when they begin working with a BPO partner:

  1. Cost management: Rising operational costs, especially those spent on providing in-house workers with benefits, recruiting, hiring, and training new staff can eat into an insurer’s bottom line. Partnering with an insurance BPO provider helps insurers access professional expertise quickly without having to sacrifice the quality of work while personnel get trained.
  2. Operational efficiency: As operations grow and expand, it can become increasingly complex and time-consuming for insurers to manage various operational processes and produce the same quality and volume of output across the board. Collaborating with BPO providers offers extra support on resource-intensive tasks to help teams stay efficient and focus on their core business.
  3. Scalability: Insurers that grow quickly or have fluctuating demands throughout the year may find it difficult to scale their operations up or down as needed. Working with a BPO partner offers insurers the agility and flexibility to handle surges or contractions in service demand with ease.
  4. Access to advanced technologies: Insurance BPO providers often have access to specialized, modern technologies that are specific to the insurance industry but may be missing in-house for businesses. There may be cost barriers for insurers to adopt or install these technologies on their own, but the economies of scale allow them to access these advanced programs through their BPO providers for better insights and efficiencies.
  5. Business continuity: Insurers can ensure business continuity and minimize the impact on operations of a power outage, natural disaster, or connectivity loss by working with a BPO partner. The provider gives insurers coverage during an adverse event and makes it possible to stay in touch with agents, policyholders, and vendors.
  6. Collaboration and innovation: Insurers can tap into experienced and specialized teams with proven processes and workflows when they partner with a BPO provider. This fosters best practices and innovation to grow the business even if the insurer is dealing with limited resources internally.

All in all, a strategic partnership with a BPO provider can help insurers elevate their operations and be more responsive to meet the evolving needs of their policyholders and the marketplace. Understanding these benefits can help you recognize when it’s the ideal time to engage in such a collaboration.

When to Use an Insurance BPO

Insurers at any stage can take advantage of a partnership with a BPO provider, they just need to determine the feasibility of doing so, identify the processes that can be outsourced, and find a provider with the right area of expertise.

Especially given the tight labor market in the insurance industry today, many insurers are running lean teams who are working longer days all while still focusing on strategic initiatives that can grow the business.

As such, there may come a time when insurers determine they need external support and can outsource a portion of their non-core processes to qualified BPO providers. In this way, insurers can maximize their efficiency and boost turnaround times while maintaining or even improving processes and the level of care policyholders receive.

Some signs that an insurer may be at the right point in time to begin leveraging a BPO provider include:

  • The to-do list of the internal team is stacking up and creating operational bottlenecks, and they’re struggling to manage day-to-day tasks;
  • Internal resources are strained from seasonally high demand or unexpected emergencies or events, leading to errors or inaccuracies;
  • Profitability is shrinking as operational costs are rising;
  • The team is spending more time on administrative tasks than on core competencies;
  • The policyholder experience is suffering from longer wait times with customer service and slower claims processing; and,
  • The insurer’s technology architecture is outdated and inefficient to keep up with the modern marketplace.

There are countless examples of when it might be time for an insurer to pursue a partnership with a BPO provider. Above all, the insurer should pay attention to the policyholder experience and their competitiveness in the marketplace to identify when they would benefit from additional support.

At the same time, insurers need to assess the economic feasibility and cost-effectiveness of outsourcing to a BPO provider to ensure it makes sense financially. This means identifying inefficient internal processes and determining the current amount of resources devoted to those workflows. Insurers can then calculate and compare the costs of working with a BPO provider and gain an objective measure of the economic advantage of a potential partnership.

How to Choose the Right Insurance BPO Partner

Insurers should seek a partner that aligns with their organizational culture, advances their strategic objectives, and possesses specialized expertise in areas where they require assistance, whether that be underwriting support, business expansion, or other areas.

Not all BPO partners will offer the same level of expertise or care for policyholders, so it’s important for insurers to exercise proper due diligence to ensure they are working with a partner that will help them successfully grow their operations. Insurers can evaluate possible BPO partners by seeing how long they have been in the business, contacting references to see what past clients have to say about them, and assessing what level of industry expertise they have through certain certifications and other credentials.

To ensure a successful partnership, the insurer should also evaluate the technological capabilities of the BPO provider, and make sure their systems will be compatible with the programs that the insurer relies on.

What are the Risks Associated with Insurance BPO?

Aside from the impressive benefits, there are some potential challenges that may arise when an insurer partners with a BPO provider. However, with the proper preparation and approach, these can typically be mitigated.

For instance, insurers may feel a loss of control over their operations when they start to outsource them to a BPO provider. But with the proper communication between both parties and an agreed-upon governing structure, there will be synergy in the partnership and insurers won’t have to feel like they’re relinquishing total control.

Insurers may also worry about the quality of output from the BPO provider. Especially if they are taking on a policyholder-facing role like with customer support, BPO providers must understand the core values of the insurer’s operations to provide the on-brand service that policyholders expect. If this alignment isn’t strong, the insurer could be putting their policyholders’ loyalty and satisfaction on the line.

Another risk is data security concerns. Since insurers handle sensitive policyholder information, it can be sensitive to share this data with third parties in full trust the provider will safeguard the information. This is why it’s essential for insurers to research and evaluate ahead of time the security measures employed by the provider and ensure their protocols meet industry standards and legal requirements.

Partner with Covenir as Your Insurance BPO Provider

Whether you need temporary support to deal with a seasonal surge in demand or you identify a skills gap within your existing team, working with a BPO partner can help you strengthen your operations in order to continue meeting the demands of your policyholders and stay ahead in the market.

Covenir is a reputable and industry-leading insurance BPO partner helping insurers scale and grow their operations without losing sight of their vision and mission. By partnering with Covenir, you can pursue your next big idea while knowing that we’re taking care of essential processes like customer support, claims processing, and more.

Our team of onshore specialists have years of industry experience and know the importance of providing the on-brand service that your policyholders have come to expect from you. We’re here to provide you with the people power you need so you can continue business as usual.

With our support, there are no limits to what you can achieve. Contact us today to learn more.