Navigating change: Why managed services make sense for insurance carriers

The property and casualty insurance industry continues to face economic pressures, talent shortages, and the need to adapt quickly in a climate of rapid change. According to our latest Voice of Our Clients research, difficulty hiring IT talent continues to be a top challenge across the industry. Many carriers struggle to train talent fast enough to keep pace with digital modernization requirements and changing customer expectations. At the same time, they work to manage and control expenses. This combination of challenges is causing some carriers to fall behind – as they face quality issues, delays in decision-making, and operational inefficiencies.

For insurers of all sizes looking to optimize spending or grow rapidly, managed services emerge as an appealing option to drive transformation. Let’s take a closer look at the managed services landscape and why it warrants consideration:

The case for large, established insurers looking to consolidate

Mature insurance carriers often focus on maintaining existing systems and processes, with few resources to dedicate to innovation. Operational costs creep up year after year. Digital disruption from InsureTech competitors leaves little room for complacency.

By optimizing costs through managed services partners, incumbent carriers can relieve internal teams to focus on higher-value strategic initiatives. Common functions well suited for managed services include data entry, claims processing, document management, and rating/pricing support. Such activities necessitate constant monitoring and adjustments of talent and expertise levels to ensure speed to market or meet customer service expectations. With extensive software automation tools available today, including generative AI to support these common functions, implementing and maintaining these tools further consumes any relieved capacity, and cost savings and deters focus on important growth initiatives.

Furthermore, managed service partners instantly inject resilience into operations through the systematic application of best practices. As cost savings and agility accrue over time, carriers invest back into new products and delivery channel improvements to meet changing customer demand and mergers and acquisitions goals.

The case for midsize to small insurers looking to grow

Meanwhile, smaller or newer entrant carriers typically have ambitions to scale rapidly and capture market share. Yet many lack the talent and resources to develop the operational and technical capabilities at pace with their growth plans. Branded insurance programs and niche market segments present real opportunities – but only for those able to move swiftly.

Here, managed services make scaling smooth and cost-effective. Rather than taking years to build teams, competencies, and technologies, emerging carriers can leverage managed services partners to handle critical operational functions right from the start. The partner’s experience and resources become virtual extensions of the in-house team. Together, they can rapidly test and launch innovative products and services that might otherwise never leave the starting blocks. Additionally, the right managed services partner can safeguard business agility at every growth stage of the carrier while ensuring operational excellence and employing the needed expertise and best practices.

Choosing the right managed services partner

Not all managed service providers take the same approach. As carriers consider options, focus on these three critical traits to find the right fit:

1. Deep insurance expertise – Domain experience matters when understanding insurer pain points and how to solve them. Look for a partner with robust expertise in successfully delivering services to the insurance industry across various lines of business. These insights inform the degree of customization that may be required, speed to market and quality.
2. Ability to manage change – Given the inevitable churn in insurance programs, it’s imperative that your managed services partner is adept at quickly training new team members and maintaining consistency even through employee transitions. They should have pipelines to source qualified candidates and optimized onboarding methods.
3. Culture of innovation – To fuel a long-term partnership, prioritize a partner that invests in IP, automation tools, and AI to continuously improve services while simultaneously integrating responsible and secure processes and systems into your enterprise environments. They will bring new ideas to the table rather than remain static. Software and platforms specifically built for insurance use cases show a more profound commitment to insurance.

The ingredients for transformation

Insurers at various stages or sizes stand to benefit from managed services, whether they aim to bolster innovation, accelerate growth objectives, or streamline operations. But more than simple outsourcing is needed to deliver on the full promise. Partners must combine deep insurance expertise, change management prowess, and innovation capabilities. With the right recipe, managed services can transform organizations navigating today’s insurance landscape.

Learn more about property and casualty insurance CGI’s end-to-end managed services.