Processing .....please wait.. 
The article has been forwarded.... 
News >> Technology >>
BPOs to capture $11 B insurance market
By agencies
|
Wednesday, 14 December 2005, 20:30 IST
NEW DELHI: The slow pace of outsourcing in the insurance domain notwithstanding, the competitive pressure is driving the sector towards higher level of outsourcing adoption now.
This has opened up new opportunity for the BPO service providers to capture about $11 billion of insurance revenues by 2008, according to the National Association of Software and Services Companies (Nasscom).
According to the latest Nasscom repost on Trends and Opportunities in Insurance BPO said, As observed in other segments of the outsourcing space, once past proof-of-concept, early movers in the industry are beginning to push-the-envelope to expand the scope of activities included in insurance BPO. The rapidly increasing maturity of customers as well as service providers is now enabling them to add more higher-value-adding elements across the insurance value chain to the existing engagements.
Although outsourcing was primarily viewed as a cost-saving tactic, a few players were beginning to realize the game changing potential it held for the sector. The report said, The ability to offer existing services at a fraction of the costs enables companies to enhance their service offerings as well as tap other segments of the market that were previously uneconomical to target leading to improved cost-margin ratios.
In India the size of insurance BPO market was pegged at $425 million in 2004, is estimated to touch $790 million by 2007. Though the insurance segment of the BFSI vertical has had a relatively slower start, compared to other segments such as payment services (credit cards), traditional banking etc., competitive pressure is driving this sector towards higher levels of outsourcing adoption, it added.
By 2008, BPO providers are likely to develop the intellectual property and technology platforms to align with various distribution channels and launch insurance ventures. These measures are likely to capture about one percent of the global annual premium total of life, annuity, and property and casualty products, Nasscom said.
Besides, the increasing product and channel complexity and proliferation were driving players in the insurance industry to tap new markets such as banking and brokerage in order to maintain revenue growth and leverage operational infrastructure.
The apex industry body said that a study by NeoIT had revealed that cost savings for offshore insurance processes undertaken in India (as compared to those done out of the U.S.) stood at 35 percent for claims adjusters and examiners, 45 percent for insurance underwriters, 35 percent for computer programmers, 15 percent for insurance sales agents and 15 percent in case of telemarketers.