Insurance companies face stiff competition in customer acquisition and retention.
The ongoing trend in the insurance industry makes it imperative that, for survival,
insurance companies need to focus on increasing their operational efficiency and
introducing innovative and cost-effective business processes. In this context, let
us try to understand more about the major challenges in the insurance industry
today. Further, we will also explore how insurance business process management
can provide effective solutions.
Many industries worldwide have already embraced the concept of business
process management and have been taking advantage of its numerous benefits.
However, the insurance sector has been slower to adopt BPM in its functions. This
could primarily be due to the sensitive nature of the core processes and the
information that is being handled. Further, the scope of insurance services is
widening as customer expectations from the service providers are increasing.
Today, customers expect faster claim processing and settlements. As a result, it is
only a matter of time before insurance companies introduce BPM in their
functioning so that they can manage large volumes at pace and scale. Such a
transition can resolve the major challenges in the industry and help insurance
players deliver exceptional customer service and increase profitability.
The insurance segment deals with diverse insurance products, catering to the
needs and aspirations of a multitude of customers. A few common examples are
life insurance, health insurance, vehicle, and commercial insurance. Hence, the
resultant complexity brings many challenges to the business process. Moreover, a
lack of transparency and delays in the system can often frustrate the customers
leading to concerns and complaints about the lack of visibility around the status
of their insurance claims. Besides, many customers do not like to enter repetitive
data in application forms. Also, the procedures involved are usually manual,
leading to higher administrative overheads.
Challenges in the insurance industry – resolution with
business process management
Insurance companies are looking for creative solutions to differentiate in this
competitive market. We need innovative solutions to the problems faced by
insurance companies so as to enhance customer experience.
The majority of the insurance processes are repetitive and manual. However,
business process management can align insurance companies with the
emerging trends in the insurance industry and bring higher ROI for these
companies. Let’s explore more about the major challenges faced by insurance
companies and their resolutions.
Claims processing – Insurers find fast and efficient processing of claims a
tough task to handle. However, speed of service delivery is a crucial
determining factor for customer satisfaction. Claim processing is usually
tedious and time-consuming as the agents need to gather data from many
sources. They might need to refer to the driver’s licenses, medical certificates,
or police reports. Furthermore, human errors due to data mismatch could
delay the process further. This insurance challenge is highly damaging to the
company’s reputation. However, automating the claims process can reduce
the manual work and increase the speed of insurance processing. Moreover, it
reduces errors and improves customer experience. As an effective solution,
insurance claims outsourcing can efficiently cover the complete process from
claims intake to claims settlement.
Insurance policy management – Trust is the key factor that sustains the
insurance business. For customers to trust the company, they need fast and
efficient insurance processing and require quick responses throughout their
interaction. For customers, the process begins with filling out the application
form. They expect great service during policy issuance, claims settlement, and
grievance settlement. Further, the policy management cycle in most
insurance companies is manual. This leads to unnecessary delays and
frustrating data entry errors. The insurance company can streamline its
operations by outsourcing insurance policy management operations, thereby
introducing transparency, promoting faster communication, and reducing
delays.
Underwriting – The process of underwriting is based on rules. It involves
analyzing information from several sources to reduce the risks involved in a
policy. There are many factors to consider like health conditions and credit
history. In many instances, complicated cases need the services of
specialized underwriters. Insurance business process management offers risk
models and other tools to aid decision-making to simplify the process of
evaluation. Moreover, it can ensure consistency and improve regulatory
compliance.
Need for addressing the insurance industry challenges
Insurance is a multibillion-dollar industry. The continuing growth stems from the
ever-increasing need for populations to protect themselves against the
numerous, rapidly changing modern-day risk. In addition, the insurance market
continues to evolve at pace due to technological advances.
The insurance industry has responded to these challenges fast. The segment has
adopted automation techniques in its business models. Yet, with the world
changing constantly, the way we handle problems must also change. There are
many challenges to overcome in the insurance industry. Therefore, insurance
problems and solutions must be approached in an innovative manner with
significant consideration to solutions like including insurance outsourcing in the
operating models.
Conclusion
Outsourcing routine operations to experienced insurance BPOs can result in
significant benefits to the sector. This is due to the introduction of standardized
workflows, reduction in the processing cycle, and transparency. Hence, BPM will
help to overcome the majority of the insurance industry’s challenges. Companies
can provide better customer experience and enjoy higher profitability. Therefore, it
is important to find effective solutions to problems in insurance companies.
SBL supports the insurance business process management with innovative
insurance solutions. Our insurance BPO division can handle the complete BPM
requirements for insurance companies, large or small. We deliver solutions to
resolve the major challenges in the insurance industry.
Contact us today, to understand our diverse solutions for your insurance business
process.
Frequently asked questions
1. What are the biggest challenges in the insurance industry?
One of the biggest problems faced by insurance companies is the need to
innovate. The insurance industry seeks out new ways to make their customers’
lives better. Furthermore, the shift in customer behavior is also a major concern.
This will result in a significant increase in risk-taking. Therefore, the cost of
insurance will increase. This will make it hard for customers to find affordable
coverage.
2. What are the challenges faced by the insurance sector in India?
Among the many challenges faced by the insurance sector in India, technology
issues are prominent. There is constant change in the insurance industry due to
new technology. The industry is also facing challenges due to the increasing use
of digital channels. The number of frauds and cybercrimes is growing. Hence,
cybersecurity is among the main challenges in India’s modern day insurance
sector.
3. What are the key barriers for insurance?
In general, insurance is expensive. It may not cover every situation and is a
significant investment. There are also disadvantages due to increased premiums
resulting from higher risks and higher administration costs. Further, insurance also
requires a lot of paperwork.
4. What is disrupting the insurance industry?
Technological advances are disrupting insurance operations in many ways.
Examples are global positioning systems, artificial intelligence, blockchain, and
the Internet of Things.
5. How is technology affecting the insurance industry?
The insurance industry is undergoing rapid change as a result of technology. As
customers become more tech-savvy, they also expect more from insurance
providers. However, insurers can improve their efficiency using artificial
intelligence, chatbots, and predictive analytics. It can make the claims process
more accurate and efficient. Additionally, technology aids in simplifying major
challenges in the insurance industry.
