Posted on 05 May 2009
The property/casualty industry has been offshoring business processes since the Y2K fixes of the late 1990s, and a combination of continuing expense pressures and expanded service offerings by offshore providers suggest that the trend may accelerate, according to a new study by Conning Research and Consulting.
“While the property/casualty industry has been sending business processing work offshore for about two decades, offshore providers have now developed a wider breadth of services that expand opportunities to outsource beyond cost savings to meet strategic needs,” said Clint Harris, analyst at Conning Research & Consulting. “As we researched the field, we surveyed offshoring providers to the property/casualty industry to understand how these providers are perceiving and responding specifically to property-casualty insurers’ objectives and how they are controlling offshoring risks. While the survey data confirm an average expense savings expectation of 32 percent, data also indicate that more strategic objectives have been dominating insurers’ decision to offshore.”
The Conning Research study, “Expense Management for Property/Casualty Processes: Evaluating the Offshore Bargain” identifies the key goals, opportunities and risks for insurers seeking outsourced services through offshoring providers.
“Offshore providers now offer a full range of property/casualty insurance business processing services, from policy management to claims and underwriting services,” said Stephan Christiansen, director of research at Conning. “Current demand for expense savings in the near term may accelerate interest in the cost savings offered with these services. At the same time, our survey suggests that offshore providers will continue to build out their service offerings, toward services that demand increasing levels of intellectual capital. However, there are significant risks associated with offshoring, including systemic risks that go well beyond security and quality failure. Performance controls need to measure offshoring processes within the context of the full process supply chain and be sensitive to cultural barriers.”
“Expense Management for Property/Casualty Processes: Evaluating the Offshore Bargain” is available for purchase from Conning Research & Consulting by calling (888) 707-1177 or by visiting the company’s web site at www.conningresearch.com.