Professional Documents
Culture Documents
Industrialization of business
operations in the insurance
industry
A volatile economic and investment environment, changing customer
needs, and increasing regulatory scrutiny continue to push insurance
companies to find new ways to improve revenue, capital utilization, risk
profile, and ultimately profitability. As claims and expenses rise at a faster
rate than premiums, and investment yields (and, often, spreads) decrease,
insurers also cut costs. With the transformation of support operations
across the industry, the traditional model of maintaining multiple or nonstandardized back offices to support different product lines and business
units is giving way to more industrialized target operating models.
PROCESS ANALYTICS TECHNOLOGY
One of the key enablers for firms pursuing their target operating models
is Global Business Services (GBS). GBS, the evolution of shared services
with a larger global footprint serving multiple functions, helps streamline
processes by leveraging a unifiedalthough not always centralized
operating entity that collaborates effectively with the rest of the function.
GBS serves as the cornerstone for any advanced target operating model and
can help firms orchestrate different sourcing structures - including captive,
outsourced, or hybrid models. Decoupling business functions (combined
with the advanced use of metrics, data-driven process management,
specialized HR/organizational design, and effective IT) industrializes
operations across the process chain and can improve scalability, lower
costs, increase control, and provide a better-quality experience for the end
client. If GBS is done well, organizations can enable better decisions, pursue
growth, and adapt to market contractions more nimbly. This paper describes
a scientific, granular approach enhanced with industry-specific experiences
to adopt the best-fit target operating model for the insurance industry.
Above average
adoption of GBS
High
Healthcare payers
Information services
Chemicals
Insurance
Capital Markets
Telecom
Banking
Retail
Life Sciences
CPG
Hi-Tech
Freight and logistics
Government
Below average
adoption of GBS
Low
Automotive
Industrial products
Extent of internal shared services
High
Figure 1. The insurance industry has been reluctant to embrace GBS when compared to other industries; however, industry
leaders are forging ahead as the need to reduce costs has escalated.
GENPACT | Whitepaper
4.0
3.5
2.5
Retail Banking
($8.1 bn)
2.0
Manufacturing
($1bn)
1.5
1.0
Healthcare - Provider
($0.9 bn)
Size of bubble represents dollar increase in spend by 2017. Source: Genpact Analysis
0.5
20
40
60
80
Figure 2. By 2017, the amount spent on operations with the potential to adopt
a more industrialized operating model is expected to grow by $1.4 billion and
$1 billion in the P&C and Life insurance industries, respectively.
58
53
41
28
38
32
37
21
7
F&A
HR
KP/Analytics
Customer
Care
Industry
Specific
Sample: Survey of 1000+ offshore shared service centers, including 125 from
29 banks and 36 from 19 unique Insurance firms
Source: Everest Group, Genpact analysis
10
Insurance
Figure 3. Even within the insurers that have adopted industrialization, more
non-core functions can be industrialized.
GENPACT | Whitepaper
Expertise/consultative
high touch services
Emerging
candidates
Pricing / Quoting
Pricing coding
Risk Management
Routine, front-office
services
Customer analytics
Customer care
Claims strategy
Legal
Regulatory reporting
Traditional
candidates
Routine, repetitive,
back-office services
Risk modelling
Fraud claim analytics
Product control
Operational reporting
Reconciliation and
exception management
Compliance
Infrastructure
Help desk
Expertise/consultative
low touch services
L1 application support
Commoditization, standardization
Source: Genpact experience
P&C Insurer
Pricing / Quoting
Risk Management
Renewals
Sales / Marketing
Reinsurance
Audit / Monitoring
Claims Strategy
Adjustments
CFO
FP&A
Investments
Internal Audit
Legal
Senior Management
Human Capital Management
Underwriting
Claims
Finance
Corporate
Premium Coding
Submission Intake
Document Preparation
Analytical Reporting
Risk Modeling
Claims Booking
Claims Close
Data Consolidation &
Analytics
TPA Relationship
BPO Audit
/ Monitoring
Infrastructure
Services
BPO Monitoring
Inf ormation Tech.
IT Global Ops
UAT Support
GENPACT | Whitepaper
Growth
Operational excellence,
efficiency, variable cost
Maturity
Maximize effectiveness and
continue drive cost
* GBS + BPO
Source: Genpact analysis
Figure 6. The full benefits of GBS are realized after the foundational stages
are completed.
Boundary
conditions
Resource
redirection
Organizational
choices
New delivery
DNA
Conclusion
Business agility in times of unprecedented
volatility requires a more strategic role for business
operations. Going forward, as markets remain
volatile and consumers product preferences
evolve, insurers should reevaluate not only their
existing product lines but also their operating
models. In addition, regulatory compliances will
create additionaland sometimes difficult to
predictburdens. To remain viable, insurance
companies must invest in new operating models
that industrialize their operations.
Develop a detailed roll-out plan. Develop a rollout plan to reach the targeted operating model
by process and by location.
GENPACT | Whitepaper
About Genpact
Genpact Limited (NYSE: G) is a global leader in designing, transforming and running business processes and operations, including those that
are complex and industry-specific. Our mission is to help clients become more competitive by making their enterprises more intelligent through
becoming more adaptive, innovative, globally effective and connected to their own clients. Genpact stands for Generating Impact visible in
tighter cost management as well as better management of risk, regulations and growth for hundreds of long-term clients including more than
100 of the Fortune Global 500. Our approach is distinctive we offer an unbiased, agile combination of smarter processes, crystallized in our
Smart Enterprise Processes (SEPSM) proprietary framework, along with analytics and technology, which limits upfront investments and enhances
future adaptability. We have global critical mass over 65,000 employees in 25 countries with key management and corporate offices in New
York City while remaining flexible and collaborative, and a management team that drives client partnerships personally. Our history is unique
behind our single-minded passion for process and operational excellence is the Lean and Six Sigma heritage of a former General Electric division
that has served GE businesses for more than 16 years.
For more information, contact, insurance.solutions@genpact.com and visit, www.genpact.com/home/industries/insurance
Follow us on Twitter, Facebook and LinkedIn.
2014 Copyright Genpact. All Rights Reserved.