Business Process Outsourcing in European Insurance

Information technology research and consulting firm Celent estimates that the core European insurance business process outsourcing market is $2.5 billion in 2008 and will grow steadily over the next five years to reach $3.5 billion in 2013. The combinationofunrelentingpressureonexpenses, vast improvements in networking and communication technology, and increased appreciation for highly flexible business models has caused virtually all insurers to explore non-traditional options for running their businesses. BPO providers talkof30–50% cost savings through outsourcing. There is also increased efficiency. But adoption of BPO by insurers for core services is progressing slowly in Europe, in spite of the United Kingdom leading the way. Delegating core insurance functions to outside parties is perceived as a risky move, particularly in continental Europe. Externally, there is pressure from a sceptical public for insurers to keep things as they are to protect local jobs. Here, Catherine Stagg-Macey, senior analyst in Celent’s Insurance Division, provides a European perspective on the insurance BPO sector