Embedding Innovation in the U.K. Insurance

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Underpinning Transformational Change and Embedding Innovation In The U.K. Insurance Sector: What Does It Mean In Practice?

2For more outsourcing solutions for insurance industry visit www.wns.com/services/insurance

Jeremy Owenson And WNS

10 years – Insurance Company Management

Underwriting and Claims

Personal Lines, Commercial and London Market

2 Years – Insurance Consultancy

6 Years – Insurance Outsourcing

Onshore and Offshore


Jeremy Owenson And WNS

10 years – Insurance Company Management

Underwriting and Claims

Personal Lines, Commercial and London Market

2 Years – Insurance Consultancy

6 Years – Insurance Outsourcing

Onshore and Offshore

WNS – Leading Provider of Insurance Outsourcing

22,000 employees worldwide

6,000 FTE in India and Sri Lanka focused on U.K. market

450 FTE in U.K.

Fulfill Policy Admin, Sales, Claims including liability and bodily injury, F&A and Actuarial


Lines Of Business Serviced

Personal Lines

Commercial Lines

Agency Management

Annuities Pensions Health LiabilityLife

Sales and Customer Service

New Business Quotes / Cancellation / Setup

Policy Administration

Claims Management

Inbound Customer Service Centers

Shared Services Across All Product lines

Finance and Accounting, Business Transformation, Research and Analytics


Identifying Core Areas For Change


Core Areas Of Change

Increased indemnity costs

Regulatory pressures

Operational costs

Increasing fraud particularly through new channels such as aggregators

Deteriorating claims service

Introduction of Solvency II

Increased regulatory regime from the FSA, DPA

Introduction of new rules on corruption

Introducing new products, channels and delivery mechanisms

Reducing headcount, sites, closed book and run off activity



Increasing fraud particularly through new channels such as aggregators

– Introduction of MID means people need the Certificate of insurance

– Prospects misrepresenting age – “it was a typo!”, e.g. DOB 20/08/78 instead of 20/08/87

– Increase in incidence of “Ghost Brokers”

– Increasing sophistication of fraudulent or exaggerated claims with complicity of supply chain

Deteriorating claims service

– Increasing incidence of injury claims in motor

– Increase in non-fault expenses

– Increase in “Recession Related” claims

Increased indemnity costs




Introduction of Solvency II

– Requires an increased understanding and reporting of risk

– Requires overall of systems, reporting and processes

– Need to establish a new compliance regime in future – pressure due to availability of resource:

– In 1997, there were 50 trained Actuaries in India, today there are 8340 student actuaries


Actuaries And India

1971 – Indian Insurance Market Nationalised

Decline in competition and reduction in Actuarial Expertise

1997 – Indian Insurance Market opened to competition

Increase in demand for Actuaries

1997 – 50 trained Actuaries in India

Accredited Organisations;– Institute of Actuaries India

– Institute of Actuaries (U.K.)

– Casualty Actuarial Society (U.S.)

– Society of Actuaries (U.S.)

As at start of 2010:

– Qualified Actuaries – 223

– Associate Actuaries – 132

– Student Actuaries – 8340




Increased regulatory regime from the FSA, DPA

– Credit Crunch and data losses tighten the screw

Benchmark standards from India:

– No mobile media

– Increased control over data – internet, email, removal data sticks

– True paperless office – whiteboards for notes

– No mobile phones in the office



Operational costs

Introducing new products, channels and delivery mechanisms

Is the money there to launch:

– New products

– Access customers through new delivery channels

– Access to customer self service and the internet?

Are you making the most of emerging technology?

Are you making the most of new underwriting differentiators / products

– For Life products – the rise in internet sales for protection and the requirement for instant decisions

Reducing headcount, sites, closed book and run off activity

– How much management time is spent reducing headcount and closing locations?

– How much time is spent administering closed book: Life closed books

Long tail policies / legacy accounts

Long tail General Insurance claims

– Do you put your best people on these accounts? What is that costing you in terms of lost sales


Understanding Mixed Opinion


The Sacred Cows!

Standard Distribution Actual Result

First Quartile (top) 25%

Second Quartile 25%

Third Quartile 25%

Fourth Quartile (bottom) 25%

Understanding areas of mixed opinion and how to tackle these to grow towards a more unified and efficient approach

Many years ago a survey asked London Market Claims Directors to rank the quality of their departments into top quartile, upper middle quartile, lower middle quartile and bottom quartile.


The Sacred Cows!

Standard Distribution Actual Result

First Quartile (top) 25% 57%

Second Quartile 25% 43%

Third Quartile 25% 0%

Fourth Quartile (bottom) 25% 0%

Understanding areas of mixed opinion and how to tackle these to grow towards a more unified and efficient approach

Many years ago a survey asked London Market Claims Directors to rank the quality of their departments into top quartile, upper middle quartile, lower middle quartile and bottom quartile.


The Sacred Cows!

How is this possible? Do people rank based on what they are good at:

– People who had good systems ranked their performance above average, stating that the systems kept the staff honest

– People who had poor systems said they employed good staff to compensate for the poor systems

The reality is, there are good and bad claims departments out there and there are good and bad people out there

We need to recognise that there is no evil in asking a specialist to deliver a service for you. We recognise that some claim need loss adjusters, but you can also have specialists in customer service, technical claims handling, accounts and recovery functions

The only problem is, People don’t like being told their babies are ugly!


What Are The Opportunities For The Board Room


The Opportunities For The Board

There is a real appetite within the BPO community to build a partnership with a client, to work with a client to jointly develop a business plan for growth. This can include:

– Special Purpose vehicles (joint ventures) between a supplier and an insurer, where the insurer gets a financial benefit

– Outsourcing to deliver new technology – the cost of technology and the ability to integrate to legacy platforms

– Commercial deals aligning interest – e.g. Gain-share, payment by results (such as per sale, percentage of amount recovered)

– Co-investment – including using BPO R&A capability to improve deals.


The Key To Transformation And Development Of A Strong Future Strategy



Exec need to understand where they want to be, and what their management band-width should be focussed on

In insurance, two key areas where the insurer can differentiate are:– Product innovation

– Pricing

There are other areas where management time can be absorbed for very little return. This can include functions often described as the back office:– Accounts

– Administration

– Payroll

– IT

– Claims

But could also include areas such as – Run-off accounts

– Closed books

– Legacy processes



For all these non-core functions, the board should look and see if there is an outsourcer who, with the right attention and experience, can deliver more effectively, and more cheaply. With the BPO appetite for taking risk and entering new partnerships, this will unlock value and reveal a potential asset in an area only seen in the past as a burden.

People need to consider having their ugly babies adopted!


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Embedding Innovation in the U.K. Insurance