Insurers turn to business process outsourcing providers for more than transactional tasks
Insurance companies in Australia are turning to business process outsourcing (BPO) providers to overcome major challenges, meet changing consumer expectations and remain competitive, according to a new research report published by Nasdaq-listed Information Services Group (ISG), a global technology research and advisory firm.
The “2022 ISG Provider Lens Insurance Services” report for Australia finds that Insurers are beginning to outsource not just transactional functions but also high-skill processes such as underwriting. In addition, providers are expanding their services beyond traditional BPO to include strategy, consulting and digital transformation.
“Insurance companies in Australia had an especially difficult year in 2022, on top of the upheavals occurring across the global insurance industry,” said Jarrod Magill, director, ISG Australia. “Even so, they are initiating the kinds of changes needed to meet emerging requirements.”
Insurance claims soared in Australia in 2022 as a result of two major disasters, the report says. A flood across two states in February and March became the third-costliest weather event in Australian history, and the telecom company Optus was hacked in September, leading to 10 million customer records being breached and a wave of claims. This came after victims of cybersecurity incidents had reported losses of A$33bn ($23.3bn) in 2020 and 2021.
At the same time, established insurance companies in Australia are being forced to revamp their technology and delivery models to meet the needs of customers that expect around-the-clock digital service and personalisation, ISG says. Facing competition from digital-native InsurTech startups that are transforming unwieldy traditional processes, insurers are modernising customer experience using new types of data and analytical tools.
Service providers are easing the strain on insurers with the resources to quickly respond to major events like the recent floods, ISG says. In a tight market for IT expertise, outsourcers can make available tens of thousands of professionals with insurance and digital technology experience.
“Australian insurers need outsourcing and new technologies to meet current and future demands,” said Jan Erik Aase, partner and global leader, ISG Provider Lens Research. “Together with service providers, they are preparing for fundamental change.”
