India has become one of the most popular destinations for offshoring insurance processes and top insurance companies in the US and Europe -- Cox Insurance Holdings, Aviva Life Insurance, AXA Sun Life -- have moved their processes to India-based captive or third-party outsourcing firms.
Fueled by the success of the US-based health care firm Aetna moving its claims adjudication process to India, many other organisations want to tread the same path.
Outsourcing and India: Complete Coverage
According to the Global Insurance Outsourcing report released by the ValueNotes Outsourcing Practice, which looks at outsourcing, currently around 63 per cent of India's insurance outsourcing revenue comes from the US. Some of the top players in the insurance vertical are WNS, HTMT, EXL, ICICI OneSource and GTL.
The report emphasises the potential for insurance outsourcing with over 1,500 property and casualty insurance companies and 1,300 health insurance companies in the US alone.
Globally, the banking, financial services and insurance vertical is the fastest growing segment in outsourcing. India's BFSI outsourcing revenues in 2003 stood at $1.1 billion, constituting 2.5 per cent of the global BFSI outsourcing, stated ValueNotes.
It estimates that the Indian insurance outsourcing revenues are likely to grow to $790 million by 2007, from an estimated $367 million in 2003, reflecting a compounded average growth rate of 21 per cent.
Several large Indian service providers have, through organic growth or acquisitions, set up centres in the US, Canada and other places that qualify as "near-shore" outsourcing destinations and are therefore more acceptable to first time outsourcers. "India has thus much to offer as an offshoring destination," said Nilesh Paranjape, senior research analyst, ValueNotes.
Insurance companies are forced to look at outsourcing/offshoring to improve efficiencies and channalise resources towards the core functions of product development and innovation.
This is a fallout of September 11, which resulted in shrinking margins, higher claims disbursement and increasing competition in the sector. Several niche providers with relevant domain expertise are emerging, encouraging insurance companies to outsource more value-added services.
The growth drivers, common to all verticals, essentially are cost saving, ability to focus on core processes of product development, innovation and marketing strategy as well as minimising risk through multiple delivery centers, the report added.
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