Transforming insurance operations through advanced ... · Transforming insurance operations through advanced operating models ... business process outsourcing (BPO), or hybrids—were

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Transforming insurance operations through advanced operating modelsInsurance executives believe there is untapped potential for advanced operating models to address complex strategic enterprise challenges

EXECUTIVE SUMMARY

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About the researchGenpact commissioned a research project conducted by an independent research firm. The goal was to assess the potential for new operating models across a wide spectrum of industry sectors and functions. More than 900 senior-level executives completed the survey. Respondents were screened based on their ability to materially influence functional decisions. The survey findings complement other research and insight derived from Genpact’s experience in designing, transforming, and operating business processes and operations.

This document presents findings drawn from 95 senior executives in the insurance industry including 52 operations executives.

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As the Insurance industry emerges from the uncertainty of the last few years, COOs and other senior operational executives are focused on growth. Insurance operations have the potential to help address some of these issues, but levels of maturity and preparedness vary widely across companies and functions. Specifically, the claims and agency support functions have emerged as two key spaces to watch. The three levers of operating model transformation—technology, process reengineering, and advanced organizational structures (shared services, business process outsourcing, and hybrids)—all create impact differently. Using commissioned research, Genpact has examined these trends to understand how enterprises are driving transformation to achieve business impact.

Introduction

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Insurance operations executives said that customer satisfaction, growth, and risk management are the top challenges for their companies

Customer satisfaction, growth and scalability, and cost are the challenges most often confronting insurers today•When asked to indicate top industry challenges, insurance executives pointed to three in

particular: customer satisfaction, scalability, and cost reduction.•Risk and regulations are just behind.•These executives are far less concerned about agility, innovation, or reduction of capital and

asset intensity (Figure 1)

Figure 1

n=52 insurance operations executives

0 10 20 30 40 50 60

Ensure compliance to regulations

Increase customer satisfaction

Manage risk

Enable company’s innovation

Increase growth and scalability

Reduce costs

Enable agility and adaptability

Reduce capital and asset intensity

Importance of the challenge (% of respondents in specific industries stating that the challenge is among the ‘Top 3‘ for their company)

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Commercial claims have significant impact on customer satisfaction, but P&C agency support can do more to drive growth • Insurance operations executives most often identified the property and casualty (P&C) claims

function as having potential for material impact on customer satisfaction.•About 84% of operations executives said that commercial claims can have material impact on

this challenge, and 71% said the same for personal claims.•Regarding growth and scalability, the biggest proportions of operations executives pointed to

P&C agency support (79%) and commercial underwriting (75%) as well as actuarial and claims analysis as offering high impact potential (Figure 2).

Claims function, agency support, and actuarial/claims analysis are well-positioned to address many top challenges

Figure 2

% of respondents stating function can have material impact on addressing challenge

n=52 insurance operations executives

5353 4653 51

Ensure complianceto regulations

Reduce costs

Increase customer satisfaction

Manage risk

% of respondents stating it is one of the top 3 challenges in their companyMagnitude of challenge

Increase growth & scalability

P&C commercial claims 84 39 6752

48 30

35 36

53 279P&C commercial underwriting 52 75 4870

34 53 62Personal policy admin/underwriting 65 46 6365

38 40P&C agency support 65 79 3739

32 19

38 40P&C personal claims 71 50 6761

34 53 62Actuarial and claims analysis 52 71 6378

41

936

6223

4014

40

14

6227

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Agency support and actuarial/claims analysis less ready to mature further

•P&C personal claims and actuarial/claims analysis were seen as the most mature functions; 80% and 78% of respondents, respectively, rated these functions as mature or very mature.

•About 74% of operational executives said the P&C commercial underwriting function is prepared to evolve further (Figure 3).

•Claims were not far behind with 68% and 67% for the personal and commercial claims functions, respectively.

•Agency support and actuarial/claims analysis are less ready to mature further (Figure 3).

Figure 3

P&C commercial underwriting and personal claims are considered the insurance functions most prepared to reach maturity

% of respondents stating the preparedness of the functions in their organizations

n=52 insurance operations executives

Fully prepared Prepared Somewhat prepared/Not prepared

39 16 45

Personal policy admin/underwriting

P&C agency support 36 14 50

Actuarial and claims analysis

373330

P&C commercial claims 48 19 33

P&C personal claims 50 18 32

P&C commercial underwriting 40 34 26

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Figure 4

Advanced organizational structures (BPO/SSC/hybrid) were often seen as impactful by insurance executives

•Advanced organizational structures—including shared service centers (SSCs), business process outsourcing (BPO), or hybrids—were more frequently cited by insurance operations executives as having a greater possibility of material impact for some functions.

•This was true for personal and commercial P&C claims (Figure 4).•However, where applicable, technology was seen as delivering greater dollar impact.

Many insurance executives saw advanced organizational structures as applicable, but radically improved technology, when appropriate, can generate greater dollar impacts

Business process re-engineering

Radically improved use of technology

Impact Index*

SSC, BPO or Hybrid

Function Impact Index* combining stated importance of challenges and stated ability of a function to address them

60

60

2746

38

29

28

46

58 144

133

1495362

29 5860 120

27

63

275028 54 13358

276928 54 14456

50

48

P&C commercial claims

P&C commercial underwriting

Personal policy admin/underwriting

P&C agency support

P&C personal claims

Actuarial and claims analysis

BPO – Business Process Outsourcing,

SSC – Shared Services

% of respondents stating the initiative can have a material impact on the function

n=52 insurance operations executives

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COOs and other senior insurance executives are once again focused on growth, following a sustained period of financial turmoil and economic uncertainty. The researchers examined how those challenges can be tackled with three levers of operating model transformation: technology, process reengineering, and advanced organizational structures.

The related transformation of operations is an untapped strategic lever for the COO as well as the CEO. However, it is sometimes seen as a formidable undertaking.

Our experience of advanced operating models, accumulated over 15 years, clearly indicates that there are agile and practical ways to transform. The key is to design, transform, and run the processes that power advanced operating models so that they closely align with measurable business goals, thus avoiding saddling the company with unnecessary and often unmanageable complexity.

This approach focuses more rigorously on the sources of impact and deliberately disregards any practice that does not yield material outcomes. It also takes a more objective and holistic look at technology, analytics, and organizational practices.

Finally, this approach harnesses the process and organizational levers available from established disciplines, such as reengineering, shared services, outsourcing, and global delivery. We think there is a smarter way to transform operating models and address the most complex strategic challenges. This is a way for COOs to make their enterprises more intelligent and generate material impact.

This document presented the highlights of research findings. Discover more in the full report.

In conclusion

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About Genpact

Genpact (NYSE: G) stands for “generating business impact.” We are a global leader in digitally-powered business process management and services. Our Lean DigitalSM approach and patented Smart Enterprise ProcessesSM framework reimagine our clients’ operating models end-to-end, including the middle and back offices – to deliver growth, efficiency, and business agility. First as a part of GE and later as an independent company, we have been passionately serving strategic client relationships including approximately one-fifth of the Fortune Global 500, and have grown to over 70,000 people. The resulting domain expertise and experience running complex operations are unique and help us drive choices across technology, analytics, and organizational design.

For more information, contact, [email protected] and visit, www.genpact.com/home/industries/insurance

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© 2016 Copyright Genpact. All Rights Reserved.

Genpact Research InstituteThe Genpact Research Institute is a specialized think tank harnessing the collective intelligence of Genpact – as the leading business process service provider worldwide - its ecosystem of clients and partners, and thousands of process operations experts. Its mission is to advance the “art of the possible” in our clients’ journey of business transformation and adoption of advanced operating models.

www.genpact.com/research-institute

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