How outsourcing is helping insurance businesses and their clients

Insurance executives could be excused for feeling an extra weight on their shoulders were they to glance at McKinsey & Company’s latest insight into their sector. In promoting its Global Insurance Report 2025, the renowned consulting firm painted a grim picture of the current landscape, saying an industry that focuses on mitigating risk and providing protection was enduring “a particularly volatile age”.¹

“The macroeconomic picture is mixed, with inflation stubbornly high and interest rates uncertain,” they wrote. “Consumer confidence remains shaky, even though the economic growth cycle appears to have bottomed out. Geopolitical instability remains a perceived threat to global growth and trade patterns are shifting amid signs of protectionism.”

Fortunately, it was not all bad news as the report went on to suggest there was cause for optimism. Reading on, they would have learned opportunities exist for successfully navigating the shifting landscape including embracing new markets, pursuing technological innovation and rethinking the likes of distribution, pricing and claims processing.

In a similar vein, an increasing number of insurers are turning to a resourcing strategy that has benefited many sectors during good times and bad. Outsourcing is on the rise across the insurance industry, with one study predicting the global market size will almost double in the eight years from 2020 – soaring from $5.8 billion to $10.2 billion by 20282².

This article will shine a spotlight on how outsourcing can ease the pressure on insurance firms by providing the sector with access to more talent, more savings and more efficiencies. Be it roles that can be outsourced, benefits to be gained or how to overcome associated challenges, there are many reasons to read on.

What is insurance outsourcing?

Insurance outsourcing is the process of delegating various business functions within an insurer to an external provider. Such tasks can range from customer service and claims processing to underwriting and general administration, with expert partners able to deliver efficiencies at reduced costs. Offshore destinations such as the Philippines have earned a reputation as hubs for quality outsourcing providers that help their onshore clients maintain pace and even outperform competitors.

^{Source: In-Depth Industry Outlook: Insurance Business Process Outsourcing (BPO) Market Size & Forecast}

What insurance processes can be outsourced?

There is no shortage of processes that insurance companies can outsource, with quality providers typically boasting a suite of services.

• Finance and accounting: insurance firms know better than most the need to keep a close eye on the bottom line and outsourcing can provide them with access to experts across a plethora of related functions. From bookkeepers and accounts payable/receivable staff to compliance, audit and taxation specialists, outsourcing providers can reduce the financial load.
• Claims processing: one of the insurance industry’s most essential functions, claims processing requires accuracy, timeliness and an unwavering commitment to positive customer experience. Outsourcing this function can help under-pressure companies settle claims faster, reduce errors and boost client goodwill.
• IT support: the tech revolution shows no signs of slowing down but it has also created a world where insurance companies can look beyond their own shores for IT expertise. With Western nations facing a battle for tech talent, offshore destinations such as the Philippines are home to countless individuals and teams that boast IT skills and knowledge at a lower cost.
• Administration: imagine being able to invest more in frontline services such as claims processing and underwriting. By outsourcing repetitive administrative functions such as policy renewals, cancellations and updates, insurers can dedicate more time and money on higher priority tasks
• Customer service: ask anyone who has navigated an insurance claim about their experience and customer service will inevitably enter the conversation. Outsourcing customer service allows firms to provide 24/7 support at reduced costs, boost satisfaction scores and free up internal teams to focus on more complex functions.

What are the benefits of insurance outsourcing?

There are a wide range of benefits for insurance businesses that choose to outsource including:

• Sustainable growth: cost reduction is a key consideration for firms wanting to achieve sustainable growth and outsourcing can play a significant role. Employing onshore staff can be a costly affair, with wages, office space and equipment just a few expenses that can impact the bottom line. Outsourcing to offshore destinations such as the Philippines can reduce such costs by up to 70%.
• Access to technology: insurance companies that are not utilizing the latest platforms and tools are doing themselves a disservice. The good news is quality outsourcing providers are already using many of the best claims processing software and customer service systems, which is why it pays to partner with them.
• Wider talent pools: the battle for talent across insurance and many related sectors is a constant worry for recruiters desperate to fill roles without straining budgets. Offshore destinations invest heavily in nurturing talent pools filled with hard-working, experienced and knowledgeable staff, easing the recruitment burden for their clients.
• 24/7 customer support: insurance is an around-the-clock business, with natural disasters and other catastrophes not restricted to happening between 9am and 5pm. By outsourcing customer support, insurance firms can afford to employ entire teams to be ready to answer calls and assist clients no matter the time of day or night.
• Scalability: there are few things worse for insurance executives than walking a staffing tightrope only for demand to soar in the blink of an eye. Experienced outsourcing providers have systems in place to help their clients respond to increased needs seamlessly and cost-effectively, not to mention making it a far simpler process to scale back when demand returns to normal.

^{Source: Insurance 2025 and Beyond | PwC}

What are the challenges of insurance outsourcing?

While there are many reasons to partner with an outsourcing provider, there are a few common challenges – but they can be overcome.

• In-house staff concerns: deciding to outsource certain functions can cause anxiety to rise among existing staff fearful of losing their jobs. To avoid dips in performance or even their departure, involve them in discussions from the outset and promote the positive impacts they will experience such as the chance to focus on more valuable and rewarding work.
• Impact on culture: the best insurance companies boast strong company cultures that have often been built over many years. Outsourcing with an unknown provider can jeopardize that good work, which is why it pays to identify an offshore partner that has values, guidelines and staff that align with your own.
• Poor communication: language barriers are an obvious concern for many newcomers to offshoring but not all outsourcing destinations are the same. For example, English is an official language in the Philippines and the nation has one of the highest literacy rates in Asia. Insurance firms should also look to partner with a provider that has clear and definitive systems and policies for communicating with onshore colleagues and clients.
• Data security: protecting policyholder data is non-negotiable in the insurance industry and some firms may be concerned about sharing such information with offshore partners. The key is to ensure the provider of choice has the proper infrastructure and processes in place to safeguard and protect such data. Look for organizations that have official certifications, while the likes of Service Level Agreements and non-disclosure agreements can also provide reassurance.
• Regulatory compliance: the insurance industry is highly regulated and firms cannot afford to be complacent when navigating the forever evolving landscape. Identify an outsourcing partner that takes such responsibility equally seriously by conducting due diligence. Crucially, continue to monitor and audit their processes to ensure ongoing compliance.

Conclusion

Insurance outsourcing may have a few challenges but, as you have just learned, they can be overcome. More importantly, the benefits of partnering with an offshore provider are too great to ignore, especially at an uncertain time when businesses are looking for ways to reduce costs, increase efficiencies and maximize productivity.

One of the greatest conveniences for clients happens to be one of the biggest challenges for businesses. Discover how outsourcing is helping organizations deliver 24/7 customer support.