Celent: Life Insurers Outsource Differently

By Allison Bell

September 07, 2004 at 08:00 PM

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Life insurers and property-casualty insurers may have different approaches to using the big business process outsourcing companies.[@@]

When researchers at Celent Communications, Boston, conducted an informal survey of 14 BPO providers earlier this year, they found that life and health outsourcing deals accounted for only 38% of the 286 deals included.

But the life and health deals involved a wide variety of services, such as new product launch services, imaging services and commission-tracking services. The property-casualty deals focused mainly on processes such as policy administration hosting, network management, electronic business applications and agent service, according to Celent's report on the survey results.

In the area of accounting, for example, life and health hosting deals outnumbered p-c hosting deals 55 to 1.

Policy administration hosting services were the most popular BPO services for both life and health and p-c insurers, but life and health deals outnumbered p-c deals 76 to 45.

In the areas of billing and general systems, the number of life and health outsourcing deals was similar to the number of p-c deals.

Property-casualty insurers might be making lighter use of BPO providers for claims, support functions and distribution because they have a long history of using traditional third-party administrators to handle those tasks, according to Craig Weber, the Celent analyst who wrote the report on the outsourcing survey.

"Celent believes that the newer BPO providers will not displace TPAs in their traditional areas of strength?particularly claims management and adjudication?because of the TPAs' vertical expertise and strong carrier relationships," Weber writes.

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