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September 9, 2002 | 1225 IST
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Nasscom presages BPO business from US insurers

Savio G Pinto in Mumbai

Nasscom, despite cautionary signals from research and advisory firms on the future of business process outsourcing, is bullish on the segment and foresees strong offshoring opportunities from US insurers.

According to a market intelligence report by Nasscom on the scope of BPO, after the successful experience of insurance majors such as GE Capital, Royal & Sun Alliance, Phoenix and Conseco Exl Services, most other leading insurance companies are evaluating off-shoring opportunities in India.

The Nasscom McKinsey Report 2002 had earlier estimated that the insurance claims processing business will be worth $400 million over the next three years. With more than 1,500 companies in the US selling some form of property and casualty insurance, it is estimated that direct written premiums exceed $280 billion and millions of individuals submit about 120 million P&C claims every year.

Statistics show that the P&C claims industry spends approximately $23 billion in human capital annually, with an estimated 150,000 claims professionals, and more than 300,000 supporting personnel. Furthermore, these individuals process about 120 million new claims every year, which opens up a big opportunity for Indian companies wanting to tap this sector.

According to the report, the current off-shoring activity in insurance suggests that claims and servicing are the focus processes since most companies that offshored insurance processes to India started with simple low-complexity claims and policy servicing processes. Now that the basic comfort level has substantially increased, these companies have now started offshoring more complex claims, risk analysis and underwriting processes.

The claims origination and settlement function holds significant potential for Indian BPO and call centre players since the potential for cost savings is the highest, and the processes are feasible enough to be offshored.

The report though spells out the risks for Indian vendors with insurance companies and BPO vendors in the US aggressively pushing for building a more efficient claims industry with an emphasis on open and accessible solutions.

Nasscom also believes that in order to obtain a sustainable competitive advantage in the claims processing business, Indian vendors need to provide automated solutions.

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