Insurance companies face a variety of challenges – both old and new. Issues like cut-throat competition, strict regulations, and government policies have been around for some time. More recently, extreme weather events, skills shortages, and new competition from asset-light insurtechs have added to insurers’ woes.
Ongoing geo-political tensions are also impacting the outlook for insurers. A recent report on the state of world insurance states: “Lines of business susceptible to higher claims as a result of the war in Ukraine include niche segments such as aviation, trade credit, political risk, and marine insurance. Demand for cyber insurance could rise.”
Meanwhile, rising inflation continues to make its presence felt, as Deloitte’s 2023 Insurance Industry Outlook outlines:
“While property-casualty price hikes were among the drivers pumping up premium volume and sending US consolidated surplus over the US$1 trillion mark for the first time, inflation is driving loss costs even higher and faster in most markets, undermining underwriting profitability. As of May 12, average replacement costs were up 16.3%—nearly twice the Consumer Price Index rise.”
As they look ahead to 2023, insurance companies need to find ways to reduce their operational costs without sacrificing customer service levels. Specifically, we expect more firms to relook their approach to staffing and consider outsourcing routine insurance administration tasks to insurance administrators – third parties that take care of insurance back-office functions.
Pursuing an outsourcing strategy helps insurers streamline their business operations, minimize operational expenses, enjoy increased flexibility by freeing up skilled (and scarce!) resources for strategic tasks, and gain an edge over their competitors by delivering outstanding levels of customer service.
Before we explore the benefits of outsourcing insurance administration, let’s clarify what these services comprise.
What are Insurance Administration Services?
Insurance administration involves managing insurance policies and dealing with the daily paperwork and details of insurance contracts. Some of the activities and responsibilities of those working in the field include:
New business services: Insurance quote development, uploading of documents, issuing of policies and proposals, data entry, and maintaining records of payment.
Policy management: Policy renewals, cancellations, reinstatements, endorsements, and other maintenance.
Claims management: Claims verification, processing, assessment, adjudication, early retirement, withdrawals, and reconciliations.
Data entry: Inputting data entry relating to mortgage claims; life, auto, and health insurance; and claims settlements.
Insurance billing and accounting: Billing of premium balance services and administering accounts receivable and accounts payable.
Commissions: Data entry and accounting services related to payable commissions.
Insurance reporting: Preparing reports regarding active policies and agent commissions.
The Benefits of Insurance Administration Services
Right now, one of the biggest drivers for outsourcing insurance administration is a lack of talent. A recent industry report entitled The Future of Insurance Hinges on Technology and Talent, highlights the scale and scope of the talent crisis in this sector:
“Skilled insurance workers who remain on the job are not experiencing wage growth to the same extent as the broader economy, which will pose continued retention and recruiting challenges for insurance companies.”
And according to Deloitte, “Carriers may struggle to fill and retain their workforce through 2023 unless there are some novel changes implemented to underlying culture that help these organizations to be potentially simply irresistible.”
Outsourcing your insurance administration to a third party gives you immediate access to resources who are knowledgeable and experienced in this aspect of insurance.
Beyond the ability to supplement your internal team, outsourcing delivers value in other areas:
- You can concentrate on your core operations and develop strategies to maximize profitability.
- Quick turnaround times and adherence to deadlines while maintaining accuracy and quality.
- Reduced operational and training expenses.
Read: 3 Ways Insurance Administration Services Can Help Your Business Grow
How To Choose an Insurance Administration Services Provider
Are your teams so occupied with back-office administration that they lack the time to devise strategies for growth and profitability?
If the answer is yes, you’d do well to consider outsourcing some or all your insurance administration services to a reputable business process outsourcing (BPO) partner.
However, it’s essential to do your homework and research your potential providers thoroughly. Poor administrative work on the part of personnel from your outsourcing partner will quickly show up in your customer service levels.
In addition to ensuring your partner employs administrators with specialist knowledge of the insurance field, you also need to evaluate their engagement and operating models:
- How flexible are they? Ideally, you want one that gives you the option of full administration support or only those services that will best benefit your business.
- How will they incorporate your business rules, systems, and processes into their approach to ensure seamless workflow?
Why Covenir for Insurance Administration Services?
Covenir helps you get where you’re headed next, fast. Our insurance administration team takes pride in being part of your team, not just an extension of it. With our help, you can achieve more in less time and at a lower cost – without sacrificing quality or results.
Learn more about Covenir’s onshore insurance BPO services.