Booming insurance business creates opportunities for IT

New Delhi: The escalating life insurance business is creating opportunities for software and outsourcing companies, as insurers are giving out their back-office functions. Through this outsourcing, while companies like Tata Consultancy Services (TCS) and International Business Machines (IBM), are roping in more business, the insurance firms are able to strengthen their foothold on the main business.

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This is helping the insurance business to be more focused despite the lack of trained employees and it also helps in slashing off a certain amount of work costs. "To build scalability and speed up our entry in the market, we have outsourced all our non-core activities to different providers. TCS is one of them," said Kapil Mehta, CEO of DLF Pramerica Life Insurance. As reported by Live Mint, Insurance Regulatory and Development Authority (IRDA)'s report has shown that fresh business, or first-year premiums, in the life insurance sector jumped 23.31 percent to 92,989 crore in 2007-08 from a year ago. In the two preceding fiscals, business had grown even faster at 94.96 percent and 47.94 percent, respectively. The increase is triggered by the Indian middle-classes new inclination for long-term saving plans, as there is an absence of proper security measures in the society.

Assessing the advantage, even the BPOs are greatly benefiting from the scenario as its providing new business opportunity. Sanjiv Kapur, Senior VP and Head of Patni Computer Systems says, "With insurance in India one of the fastest growing businesses, outsourcing of operational work by life insurers is a very positive industry." Max New York Life Insurance this month entered an outsourcing agreement with IBM India for Max Vijay, a new life insurance policy in which a policyholder can invest as little as 10 every day. For this, IBM shall provide complete services from policy set-up to claims processing and customer service.

The definite impact of the insurance business is felt in the country, as it is the home for 21 life insurance companies. The number of firms opting for the business swelled with India opening the platform for private sector in 2000.