third party outsourcing the opportunity mike benton managing director

The Future of OutsourcingThe Future of Outsourcing

THIRD PARTY OUTSOURCING

THE OPPORTUNITY

MIKE BENTONMANAGING DIRECTOR


A definition:A definition:

“Long-term contracting of selected business processes to an outside provider to help achieve increased shareholder value”


What can be Outsourced:What can be Outsourced:

• Policy administration– new business– existing business

• Underwriting• Claims• Finance / Returns / Valuation• All of these functions


Why Outsource?Why Outsource?

• Increasing business loads• Reduced budgets• Less underwriting availability• Increased pressure for service


Why Outsource?Why Outsource?

• In-house underwriting is expensive• Pressure to reduce costs• Guaranteed resources for peaks and troughs• Recruitment and training


In-house SolutionsIn-house Solutions

• Overtime• Increase cost – short term need• Recruiting• Long lead time• Pressure on accommodation


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)


BUT ……………………...BUT ……………………...

It has to be a strategic decision with

a long term commitment


AND ……………………..AND ……………………..

Both parties must enjoy a financial benefit with

a relationship trending towards partnership


Management Involvement:Management Involvement:

• Continual• Contractual (negotiation and subsequent)• Attitude and Approach• In the detail• Impact on own company• Understand Regulatory implications


Regulatory Involvement:Regulatory Involvement:

• The Industry has a poor track record with managing regulatory risk

• We are heading for “risk-based” supervision• Outsourcing = Risk


Regulatory Involvement:Regulatory Involvement:

• Regulatory obligations cannot be outsourced• Outsourcers must employ Approved Persons• Involve the Regulator• Adequate risk management controls must

be demonstrated


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


Drivers of underwriting and claims outsourcing


• Market centralisation• Automation

– on critical mass of underwriting teams– impact on development of underwriters

• Specialisation/technical excellence




• Reinsurers– changes in service proposition– provision of outsourcing services– reinsurance structures


Practicalities of outsourcingPracticalities of outsourcing• Philosophy

– familiarity

• Cost control• Quality Control• Errors

– who picks up the tab– liability cover for non-risk carriers……..


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


Outsourcing UnderwritingOutsourcing Underwriting

Quality Advantage

Cost Service


Advantages of OutsourcingAdvantages of Outsourcing

• Pay as you use• Switch on – switch off• Flexibility of staffing• No additional management needs• No space issues


Some benefits of outsourcing:Some benefits of outsourcing:

• Better management information• Easier to manage• Could become a ‘virtual’ business• Increase product range


The Future:The Future:

• Outsourcing will grow further • Its scope will widen• Technological advances make it easier


INFORMATION TECHNOLOGYINFORMATION TECHNOLOGY

What is Available today?



Semi-Intelligent Underwriting/Admin Systems

• On Line Medical Tracking Systems• Real Time Underwriting Links(DELIUS)

• Information Exchange (XML)• Legacy Information Exchange(EDI)



ISSUES with CURRENT SYSTEMS

• Not intelligent enough• Expensive• Not integrated to other systems



How can Outsourcing & IT help with these Issues



Outsourcer’s can develop acceptable systems which allow cost effective outsourcing



FUTURE DEVELOPMENTS

Intelligent Underwriting• Fully Integrated• Completely Flexible



ADVANTAGES

• Cost Effective Underwriting End to End• Immediate Rapid speed of Issue• Lower NPW rate


SMART

DELIUS

MEDITRAK

HTML

Remote U/W

XML Info

Exchange

U/W

THE UNDERWRITING SOLUTION

Information Exchange

THE UNDERWRITING SOLUTION

Information Exchange


Application

Smart System

MEDITRAK

DELIUS

UNDERWRITING

Process Plan

UNDERWRITING

Process Plan


Application

Smart System

MEDITRAK

DELIUSBroker

Online application – sent electronically

Insurance OfficeApplication – electronic

or imaged – sent electronically

UNDERWRITING

Process Plan

UNDERWRITING

Process Plan


MEDITRAK

DELIUSBroker

Online application – sent electronically

Insurance OfficeApplication – electronic

or imaged – sent electronically

Application

Smart System

UNDERWRITING

Process Plan

UNDERWRITING

Process Plan


Application

Smart System

MEDITRAK

DELIUSOffice A

Underwriting PhilosophyOffice B

Underwriting PhilosophyOffice C

Underwriting PhilosophyOffice D

Underwriting Philosophy

UNDERWRITING

Process Plan

UNDERWRITING

Process Plan


Application

MEDITRAK

DELIUS

Smart System

Broker

Decision sent electronically

Insurance Office


Where decision can be made by Smart System

UNDERWRITING

Process Plan

UNDERWRITING

Process Plan


Application

MEDITRAK

DELIUS

Smart System

DELIUS

Where decision cannot be made by Smart System

UNDERWRITING

Process Plan

UNDERWRITING

Process Plan


Application

Smart System

MEDITRAK

DELIUS

UNDERWRITING

Process Plan

UNDERWRITING

Process Plan


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


Application

MEDITRAK

Smart System

DELIUS

Where decision can be made by underwriters

Broker


Insurance Office


UNDERWRITING

Process Plan

UNDERWRITING

Process Plan


Application

Smart System

MEDITRAK

DELIUS

MEDITRAK

Where further evidence is required by underwriters

UNDERWRITING

Process Plan

UNDERWRITING

Process Plan


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


Application

Smart System

MEDITRACKMEDITRAK

DELIUSDELIUS

UNDERWRITING

Process Plan

UNDERWRITING

Process Plan


Application

MEDITRAK

Smart System

DELIUS

And once decision can be made by underwriters

Broker


Insurance Office


UNDERWRITING

Process Plan

UNDERWRITING

Process Plan


If managed correctly…….

Third Party Outsourcing is• Cost effective• Financially efficient

and ‘’a good place to be”

SUMMARYSUMMARY


Questions

Questions

Questions

Questions

third party outsourcing the opportunity mike benton managing director

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