U.S. insurance companies expand outsourcing after pandemic, war and other factors create ongoing series of crises, ISG Provider Lens report says
Insurance companies in the U.S. are strengthening their partnerships with service providers to efficiently use new digital technologies to increase customer satisfaction, according to a new research report published by Information Services Group (ISG) (Nasdaq: III), a leading global technology research and advisory firm.
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“They have started to reimagine, reinvent and reposition themselves for long-term success, with service providers playing key roles in helping them adapt.”
The 2022 ISG Provider Lens™ Insurance Services report for the U.S. finds the country’s insurance industry has responded to rapid changes in business conditions since the beginning of the COVID-19 pandemic by acquiring more advanced services from third-party providers. Faced with growing claims, rising inflation and changing customer expectations, U.S. insurers have taken advantage of a head start in outsourcing to build essential new capabilities in collaboration with providers.
“Insurance companies are dealing with major changes that have emerged over the last three years,” said Paul Schreiner, ISG partner, insurance. “They have started to reimagine, reinvent and reposition themselves for long-term success, with service providers playing key roles in helping them adapt.”
In 2022, higher risk profiles and other disruptions caused by the pandemic collided with new events, including the war in Ukraine, to create an ongoing series of crises for the insurance industry, the report says. Insurance companies see new technologies as essential to respond to these crises, but most have struggled to hire and retain enough IT experts to transform their systems, so outsourcing is becoming a more critical resource.
U.S. firms, which have embraced outsourcing for decades, are now turning to partners for more than just cost savings, ISG says. Insurance service providers of all types have developed a deep understanding of the insurance industry, organizations and customers and are even helping clients develop new products.
To serve the new generation of digital-native customers, insurance carriers are creating more personalized solutions that require considerable experimentation and the freedom to move beyond legacy processes and corporate culture, the report says. Companies are using AI and machine learning to collect and analyze data from internal and external sources that can be used to quickly craft offerings targeted at specific customers.
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“The next generation of insurance products will not be ‘one size fits all,’” said Jan Erik Aase, partner and global leader, ISG Provider Lens Research. “Service providers are helping clients gain a competitive edge in attracting new, digital-savvy customers.”
The report also examines other trends in the U.S. insurance services industry, including how companies are responding to rising consumer interest in life and retirement insurance, how property and casualty insurers are emerging from archaic legacy systems and how new rules and products are changing the roles of life and retirement third-party administrators (TPAs).
For more insights into the challenges faced by insurance companies in the U.S., along with advice on addressing those challenges, see the ISG Provider Lens™ Focal Points briefing here.
The 2022 ISG Provider Lens™ Insurance Services report for the U.S. evaluates the capabilities of 50 providers across four quadrants: Life and Retirement Insurance BPO Services, Property and Casualty Insurance BPO Services, Insurance ITO Services, and Life and Retirement Insurance TPA Services.
The report names Accenture, Cognizant and Infosys as Leaders in all four quadrants. It names DXC Technology, EXL, Genpact, TCS and WNS as Leaders in three quadrants each and illumifin as a Leader in two quadrants. Atos, Capgemini, CGI, NTT DATA, Sutherland and Wipro are named as Leaders in one quadrant each.
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