Conning Research: P&C Offshore BPO May Accelerate

The property/casualty industry's use of offshore business process outsourcing (BPO) may accelerate owing to an widening range of services that expand the opportunity beyond cost savings into strategic opportunities, according to a new study by Conning Research & Consulting (Hartford). The study, "Expense Management for Property-Casualty Processes: Evaluating the Offshore bargain," found that P&C companies were enjoying an average expense savings of 32 percent, but were tending to be motivated more by strategic considerations than cost savings, according to a Conning press release.

"As we researched the field, we surveyed offshoring providers to the property-casualty industry to understand how these providers are perceiving and responding specifically to property-casualty insurers' objectives and how they are controlling offshoring risks," says Clint Harris, an analyst at Conning.

Offshore BPO providers now offer a fully range of property casualty insurance business processing services, from policy administration to claims and underwriting services, according to Stephan Christiansen, director of research, Conning. "Current demand for expense savings in the near term may accelerate interest in the cost savings offered with these services," Christiansen acknowledges. "At the same time, our survey suggests that offshore providers will continue to build out their service offerings, toward services that demand increasing levels of intellectual capital."

However, Christiansen adds, there are significant risks associated with offshoring, including systemic risks that go well beyond security and quality failure. "Performance controls need to measure offshoring processes within the context of the full process supply chain and be sensitive to cultural barriers," he remarks.

Anthony O'Donnell has covered technology in the insurance industry since 2000, when he joined the editorial staff of Insurance & Technology. As an editor and reporter for I&T and the InformationWeek Financial Services of TechWeb he has written on all areas of information ... View Full Bio