Insurance
Outsourcing to
grow at
30 pc pa, touch
$2 bn by 2010
Revenues
from insurance
offshoring to
India are expected
to grow to around
$2 billion by
2010 from the
present $690 million,
according to a
report by research
company ValueNotes.
The report also
estimates that
the industry is
expected to see
close to 100,500
employees by 2010.
According to the
report, "Insurance
Outsourcing: India
Gains Momentum
As Offshoring
Intensifies -
Trends, Insights
and Key Vendor
Profiles,"
mounting cost
pressures, increasingly
stringent regulatory
compliance and
the need to differentiate
product offerings
will make offshoring
a growing imperative
for the global
insurance industry.
The report says
offshoring of
insurance services
to India will
be propelled into
a higher growth
phase with more
than 30 per cent
annual growth
every year for
the next three
years.
This report is
an update to an
earlier study
on insurance outsourcing,
where ValueNotes
had estimated
a growth rate
of 21 percent
per annum. In
reality, the industry
has grown at an
estimated 23 per
cent CAGR in the
last three years.
This is very different
from other estimates
at that time,
which ranged from
30 to 40 per cent.
According to Arun
Jethmalani, CEO
of ValueNotes,
the global insurance
industry still
lags industries
such as banking,
financial services
and telecom in
terms of offshoring
maturity.
However, insurance
industry dynamics
have changed rapidly
in the last two
to three years
owing to rising
natural calamities,
fraud and changing
consumer demographics.
The Indian offshore
services provider
landscape consists
of captives of
large insurance
companies, third
party vendors
and joint ventures.
"While traditional
captive and third
party contracts
will continue
to be signed,
an increasing
proportion of
offshore contracts
will move towards
'hybrid' operating
arrangements,"
Jethmalani said.
The report suggests
that while, traditional
services such
as claims processing,
policy management
will continue
to provide volume
growth to offshore
BPO providers,
new services such
as analytics and
decision support
will drive value
growth.
Driving the growth
in third party
as well as hybrid
arrangements will
be the large third
party vendors
such as Genpact,
EXL Service and
WNS, all of whom
have significant
domain expertise
owing to recent
acquisitions or
a legacy of providing
captive insurance
services, says
the report.
The other success
story is that
of the BPO offshoots
of IT companies,
which have been
leveraging their
offshoring knowledge,
client base and
financial backing
from their IT
parents.
In this group,
BPO units of companies
such as IBM, TCS,
Wipro and Infosys
BPO have been
building insurance
capabilities rapidly,
and are strongly
positioned for
the future.
According to Mohit
Thukral, insurance
practice head
at Genpact, "product
development will
be a huge trend
in the next two-three
years in terms
of work related
to analytics and
product pricing
being offshored
from India".
