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The Future of OutsourcingThe Future of Outsourcing
THIRD PARTY OUTSOURCING
THE OPPORTUNITY
MIKE BENTONMANAGING DIRECTOR
The Future of OutsourcingThe Future of Outsourcing
A definition:A definition:
“Long-term contracting of selected business processes to an outside provider to help achieve increased shareholder value”
The Future of OutsourcingThe Future of Outsourcing
What can be Outsourced:What can be Outsourced:
• Policy administration– new business– existing business
• Underwriting• Claims• Finance / Returns / Valuation• All of these functions
The Future of OutsourcingThe Future of Outsourcing
Why Outsource?Why Outsource?
• Increasing business loads• Reduced budgets• Less underwriting availability• Increased pressure for service
The Future of OutsourcingThe Future of Outsourcing
Why Outsource?Why Outsource?
• In-house underwriting is expensive• Pressure to reduce costs• Guaranteed resources for peaks and troughs• Recruitment and training
The Future of OutsourcingThe Future of Outsourcing
In-house SolutionsIn-house Solutions
• Overtime• Increase cost – short term need• Recruiting• Long lead time• Pressure on accommodation
The Future of OutsourcingThe Future of Outsourcing
Reasons for selecting an outsourcer:
Reasons for selecting an outsourcer:
• Fit for purpose (now and future)• Competence and track record• Cultural ‘fit’• HR policy• Service levels• Financial (cost, impact, VAT)
The Future of OutsourcingThe Future of Outsourcing
BUT ……………………...BUT ……………………...
It has to be a strategic decision with
a long term commitment
The Future of OutsourcingThe Future of Outsourcing
AND ……………………..AND ……………………..
Both parties must enjoy a financial benefit with
a relationship trending towards partnership
The Future of OutsourcingThe Future of Outsourcing
Management Involvement:Management Involvement:
• Continual• Contractual (negotiation and subsequent)• Attitude and Approach• In the detail• Impact on own company• Understand Regulatory implications
The Future of OutsourcingThe Future of Outsourcing
Regulatory Involvement:Regulatory Involvement:
• The Industry has a poor track record with managing regulatory risk
• We are heading for “risk-based” supervision• Outsourcing = Risk
The Future of OutsourcingThe Future of Outsourcing
Regulatory Involvement:Regulatory Involvement:
• Regulatory obligations cannot be outsourced• Outsourcers must employ Approved Persons• Involve the Regulator• Adequate risk management controls must
be demonstrated
The Future of OutsourcingThe Future of Outsourcing
Impact on underwriting & claimsImpact on underwriting & claims
• Increasingly likely to include outsourcing of– medical evidence collection– technical assessment
• Outsourcing of whole of risk management cycle likely by some companies
The Future of OutsourcingThe Future of Outsourcing
Drivers of underwriting and claims outsourcing
Drivers of underwriting and claims outsourcing
• Market centralisation• Automation
– on critical mass of underwriting teams– impact on development of underwriters
• Specialisation/technical excellence
The Future of OutsourcingThe Future of Outsourcing
Drivers of underwriting and claims outsourcing
Drivers of underwriting and claims outsourcing
• Reinsurers– changes in service proposition– provision of outsourcing services– reinsurance structures
The Future of OutsourcingThe Future of Outsourcing
Practicalities of outsourcingPracticalities of outsourcing• Philosophy
– familiarity
• Cost control• Quality Control• Errors
– who picks up the tab– liability cover for non-risk carriers……..
The Future of OutsourcingThe Future of Outsourcing
Impact on outsourcing opportunities
Impact on outsourcing opportunities
• Greater opportunities• Acceleration of time to market place for new
products– acquisition of systems or skill sets– white labelling– outsourcing of back office
• New and existing players
The Future of OutsourcingThe Future of Outsourcing
Outsourcing UnderwritingOutsourcing Underwriting
Quality Advantage
Cost Service
The Future of OutsourcingThe Future of Outsourcing
Advantages of OutsourcingAdvantages of Outsourcing
• Pay as you use• Switch on – switch off• Flexibility of staffing• No additional management needs• No space issues
The Future of OutsourcingThe Future of Outsourcing
Some benefits of outsourcing:Some benefits of outsourcing:
• Better management information• Easier to manage• Could become a ‘virtual’ business• Increase product range
The Future of OutsourcingThe Future of Outsourcing
The Future:The Future:
• Outsourcing will grow further • Its scope will widen• Technological advances make it easier
The Future of OutsourcingThe Future of Outsourcing
INFORMATION TECHNOLOGYINFORMATION TECHNOLOGY
What is Available today?
The Future of OutsourcingThe Future of Outsourcing
INFORMATION TECHNOLOGYINFORMATION TECHNOLOGY
Semi-Intelligent Underwriting/Admin Systems
• On Line Medical Tracking Systems• Real Time Underwriting Links(DELIUS)
• Information Exchange (XML)• Legacy Information Exchange(EDI)
The Future of OutsourcingThe Future of Outsourcing
INFORMATION TECHNOLOGYINFORMATION TECHNOLOGY
ISSUES with CURRENT SYSTEMS
• Not intelligent enough• Expensive• Not integrated to other systems
The Future of OutsourcingThe Future of Outsourcing
INFORMATION TECHNOLOGYINFORMATION TECHNOLOGY
How can Outsourcing & IT help with these Issues
The Future of OutsourcingThe Future of Outsourcing
INFORMATION TECHNOLOGYINFORMATION TECHNOLOGY
Outsourcer’s can develop acceptable systems which allow cost effective outsourcing
The Future of OutsourcingThe Future of Outsourcing
INFORMATION TECHNOLOGYINFORMATION TECHNOLOGY
FUTURE DEVELOPMENTS
Intelligent Underwriting• Fully Integrated• Completely Flexible
The Future of OutsourcingThe Future of Outsourcing
INFORMATION TECHNOLOGYINFORMATION TECHNOLOGY
ADVANTAGES
• Cost Effective Underwriting End to End• Immediate Rapid speed of Issue• Lower NPW rate
The Future of OutsourcingThe Future of Outsourcing
SMART
DELIUS
MEDITRAK
HTML
Remote U/W
XML Info
Exchange
U/W
THE UNDERWRITING SOLUTION
Information Exchange
THE UNDERWRITING SOLUTION
Information Exchange
The Future of OutsourcingThe Future of Outsourcing
Application
Smart System
MEDITRAK
DELIUS
UNDERWRITING
Process Plan
UNDERWRITING
Process Plan
The Future of OutsourcingThe Future of Outsourcing
Application
Smart System
MEDITRAK
DELIUSBroker
Online application – sent electronically
Insurance OfficeApplication – electronic
or imaged – sent electronically
UNDERWRITING
Process Plan
UNDERWRITING
Process Plan
The Future of OutsourcingThe Future of Outsourcing
MEDITRAK
DELIUSBroker
Online application – sent electronically
Insurance OfficeApplication – electronic
or imaged – sent electronically
Application
Smart System
UNDERWRITING
Process Plan
UNDERWRITING
Process Plan
The Future of OutsourcingThe Future of Outsourcing
Application
Smart System
MEDITRAK
DELIUSOffice A
Underwriting PhilosophyOffice B
Underwriting PhilosophyOffice C
Underwriting PhilosophyOffice D
Underwriting Philosophy
UNDERWRITING
Process Plan
UNDERWRITING
Process Plan
The Future of OutsourcingThe Future of Outsourcing
Application
MEDITRAK
DELIUS
Smart System
Broker
Decision sent electronically
Insurance Office
Decision sent electronically
Where decision can be made by Smart System
UNDERWRITING
Process Plan
UNDERWRITING
Process Plan
The Future of OutsourcingThe Future of Outsourcing
Application
MEDITRAK
DELIUS
Smart System
DELIUS
Where decision cannot be made by Smart System
UNDERWRITING
Process Plan
UNDERWRITING
Process Plan
The Future of OutsourcingThe Future of Outsourcing
Application
Smart System
MEDITRAK
DELIUS
UNDERWRITING
Process Plan
UNDERWRITING
Process Plan
The Future of OutsourcingThe Future of Outsourcing
Application
Smart System
MEDITRAK
DELIUS
Office A
Underwriting PhilosophyOffice B
Underwriting PhilosophyOffice C
Underwriting PhilosophyOffice D
Underwriting Philosophy
Underwriting Guides
SURE LUIS etc
UNDERWRITING
Process Plan
UNDERWRITING
Process Plan
The Future of OutsourcingThe Future of Outsourcing
Application
MEDITRAK
Smart System
DELIUS
Where decision can be made by underwriters
Broker
Decision sent electronically
Insurance Office
Decision sent electronically
UNDERWRITING
Process Plan
UNDERWRITING
Process Plan
The Future of OutsourcingThe Future of Outsourcing
Application
Smart System
MEDITRAK
DELIUS
MEDITRAK
Where further evidence is required by underwriters
UNDERWRITING
Process Plan
UNDERWRITING
Process Plan
The Future of OutsourcingThe Future of Outsourcing
Application
Smart System
DELIUS
Special tests
Letters to GPs
GPRsMEDITRAK
Exam by doctors
Exam by nurses
Where further evidence is required by underwriters
UNDERWRITING
Process Plan
UNDERWRITING
Process Plan
The Future of OutsourcingThe Future of Outsourcing
Application
Smart System
MEDITRACKMEDITRAK
DELIUSDELIUS
UNDERWRITING
Process Plan
UNDERWRITING
Process Plan
The Future of OutsourcingThe Future of Outsourcing
Application
MEDITRAK
Smart System
DELIUS
And once decision can be made by underwriters
Broker
Decision sent electronically
Insurance Office
Decision sent electronically
UNDERWRITING
Process Plan
UNDERWRITING
Process Plan
The Future of OutsourcingThe Future of Outsourcing
If managed correctly…….
Third Party Outsourcing is• Cost effective• Financially efficient
and ‘’a good place to be”
SUMMARYSUMMARY
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