The Hindu Business Line : `Insurance cos may move to outsourcing in next 15 years'

Insurance companies in India will move towards outsourcing in the next 15 years. With the increase in the scale of insurance companies in the country, they will choose to outsource non-core activities, according to Mr Sandip Patel, Head, Asia Pacific Financial Services, IBM Business Consulting Services.

Insurers in India would gradually move towards outsourcing activities such as claims processing, data mining, policy administration, document management, bill payments, call centre services and agency compensation systems.

According to a study entitled "Insurance 2020" conducted by the IBM Institute for Business Value, the traditional agency channel is likely to decline by 2020 in the face of smart software and financial services advocates.

Around 30 CEOs of insurance companies across the world have been interviewed for the study.

A 15-year time frame would inevitably produce a large number of partially and even totally virtual insurance companies to meet the needs of consumers and businesses, the study stated. It added that with increasing `consumerism' for financial services, customers would look for convenience.

Insurance services in the future might not be provided by insurance companies but by firms that provide customer care and have in-house Web services.

However, non-traditional partnerships such as bancassurance, shopassurance and new business models will be the order of the day.

According to the study, technology will be a tool to solve all the problems of the insurance industry. Indian insurers were in talks with IBM to examine the possibilities of outsourcing non-core activities, Mr Patel said.

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