Policy administration is a fundamental business function for any insurer. The stakes are high in ensuring consistent customer service delivery across the operational value chain; failure could result in complaints being lodged with the ombudsman, reputational damage and ultimately the loss of business. Angelique Strumpher, Administration Manager at SilverBridge, examines how outsourcing can help mitigate this.
“One of the most significant challenges facing traditional insurers and brokerages are inefficient processes, outdated technology and too many manual touch points which all contribute to high operating costs,” she said.
This has resulted in insurers not only in South Africa but the rest of the continent looking for best practice initiatives that leverage technology and outsourced services to scale according to requirements, thus improving market penetration of products.
“Africa is uniquely positioned to bypass the ‘call centre’ age and can rapidly adopt digital platforms to enable innovative solutions such as digitised sales and more robust automated administration,” added Strumpher.
“In South Africa, with insurers having a significant amount of legacy systems and processes, Digital Transformation, automation, and outsourcing become more challenging.”
Benefits abound
Just as with any other business process, outsourcing policy administration does provide the insurer with several benefits.
“For one, freeing up time and capacity enable the insurer to focus more on sales,” added Strumpher.
“In addition, outsourcing delivers economies of scale so instead of buying and implementing new technologies to administrate policies, the outsourced solution (or service provider) can take care of it.”
Inevitably, this results in improved customer service delivery across the business value chain; with the insurer entering into service level agreements with the outsourced provider. Accountability and quality of service are also taken care of.
“Because the policy administration function is a mission-critical element for the insurer or broker, the discussion to outsource must form part of a strategic discussion,” said Strumpher.
“Depending on what phase of business the insurer or broker is in, the thought of outsourcing will either be appealing or not. The financial position of the company also plays a big part in determining the need for outsourcing as well as the objectives in terms of growing their book, acquiring new books of business, rolling out new products, or just managing their current book of business.”
Hitting the ground running
Strumpher says that outsourced policy administration is ideal for start-ups that have been in business for a few years and have proved their product works. They have reached capacity in terms of manual processing and are now seeking to invest in technology without incurring significant costs.
“However, it also works well for companies who have been in business for a longer period, are launching new products and want to prove the concept first before incurring huge costs,” she said.
“Finally, even those established insurers or brokers looking to replace legacy systems with new technology while optimising current operational processes can benefit from investigating the outsourced route.”
The concept of outsourced policy administration is not new; it does take quite a bit of strategic and financial analysis to determine the value over insourcing, upgrading existing technology and migration from legacy systems.
“There is an opportunity for insurers to embrace the concept of outsourced services,” said Strumpher.
“This allows for a refocus of selling the right product to the right target market. Partnering with the right company who has an FSP license and is authorised to perform administrative functions can help achieve your strategic goals by optimising your business without having to invest hundreds of thousands of Rands in technology.”
