Demand for technological expertise will see insurance outsourcing grow

Demand for technological expertise will lead to a large growth in outsourcing by the insurance sector next year, according to a new study.

The report, by industry insights firm Everest Group, said insurers needed help to understand the requirements and priorities of digital consumers. In response they are looking to bring in data analytical skills and digital expertise from outside the organisation.

The research found that this additional expenditure would see the Business Process Outsourcing (BPO) insurance market grow to around $3.5 billion in 2015, up from $2 billion in 2011. It also said that the property and casualty (P&C) insurance sector spending will grow at twice the rate of the life and pension (L&P) segment. Although it added that the L&P segment was more mature in regards to BPO and currently accounted for 60% of total spending.

Everest claimed that outsourcers are now looking to extend their service offerings beyond processes, such as claims processing and policy administration, and are entering niche segments, such as specialty insurance and reinsurance.

The insights firm also said that while the United States is the leading adopter of insurance BPO with over 60% of the contracts, the United Kingdom is actually the largest insurance BPO market with a 47% share.