In the second post in this series, we covered insurers’ propensities for (and the liabilities in) assuming they have to keep all of their strategic responsibilities in-house and a natural reluctance to expose their data. We discovered it’s often more productive and competitively advantageous to use external resources to optimize their operations strategically than it is to keep them in-house. Those revelations allowed us to shift our perspective from the tactical business processes covered by BPO to the more overarching enterprise-level value of strategic operations support (SOS). In this third post, we’ll solidify the value of SOS and make a business case for its adoption.
SOS can transform businesses because it covers the entire insurance lifecycle. By outsourcing strategic activities — and assigning accountability for the outcomes of those activities — insurers can reduce and control operating costs (and non-compliance penalties), and improve operations. They can take advantage of prevailing capabilities, focused expertise, and professional objectivity to ensure workflow agility, competitive responsiveness, and to optimize internal resources.
Insurers can expect SOS providers to devote their attention to the intricacies of product development, underwriting, policy, and claims administration, as well as finance, technology and data sciences, regulatory compliance and more. Meanwhile insurers can devote their attention to generating revenue, earning market share and return on equity, driving up shareholder value, and satisfying policyholders.
It’s a Matter of Focus
By relieving insurers of operational pressures and demands, SOS enables insurers to focus on the things that matter most — policyholder requirements, market opportunities, pricing, distribution, and service. SOS allows insurers to focus on service, rather than on servers — on profit, rather than on process.
And there’s something else to which we allude in our previous post: Insurers are historically reluctant to (as they put it) give up their data. The truth is they don’t have to give it up. And they don’t have to put it at risk. Here’s why: To be reliable and trustworthy partners, SOS providers must respect the sanctity of insurers’ data and they must observe all proprietary and contractual obligations to protect it.
SOS is a lot like common sense and experience. The only difference is that acquiring SOS should and can be expeditious and more cost-effective than trying to build the same expertise in-house. The needs-assessment required of the SOS decision arguably is reducible to one question, two at most: (1) Are the insurer’s strategic operations streamlined and sustainable? If not, (2) does the organization have the resources to optimize them? If the answer is no, then as a matter of practicality, the insurer should explore SOS.
Get Ahead or Get Behind
SOS may seem novel, at least for the moment. Maybe it is. But if so, it’s also inevitable. The pace of change will only accelerate. Competitive pressure will only increase. The demands on every insurer’s time and attention will only grow. Something has to give.
SOS is the safety valve for insurers about to explode from the tension of managing core operations.
We’ll have more to say about relief — and how SOS provides it — in the next post in this series.
See you then.