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THIRD PARTY OUTSOURCING THE OPPORTUNITY MIKE BENTON MANAGING DIRECTOR

THIRD PARTY OUTSOURCING THE OPPORTUNITY MIKE BENTON MANAGING DIRECTOR. A definition:. “Long-term contracting of selected business processes to an outside provider to help achieve increased shareholder value”. What can be Outsourced:. Policy administration new business existing business

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THIRD PARTY OUTSOURCING THE OPPORTUNITY MIKE BENTON MANAGING DIRECTOR

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  1. THIRD PARTY OUTSOURCING THE OPPORTUNITY MIKE BENTON MANAGING DIRECTOR

  2. A definition: “Long-term contracting of selected business processes to an outside provider to help achieve increased shareholder value”

  3. What can be Outsourced: • Policy administration • new business • existing business • Underwriting • Claims • Finance / Returns / Valuation • All of these functions

  4. Why Outsource? • Increasing business loads • Reduced budgets • Less underwriting availability • Increased pressure for service

  5. Why Outsource? • In-house underwriting is expensive • Pressure to reduce costs • Guaranteed resources for peaks and troughs • Recruitment and training

  6. In-house Solutions • Overtime • Increase cost – short term need • Recruiting • Long lead time • Pressure on accommodation

  7. Reasons for selecting an outsourcer: • Fit for purpose (now and future) • Competence and track record • Cultural ‘fit’ • HR policy • Service levels • Financial (cost, impact, VAT)

  8. BUT ……………………... It has to be a strategic decision with a long term commitment

  9. AND …………………….. Both parties must enjoy a financial benefit with a relationship trending towards partnership

  10. Management Involvement: • Continual • Contractual (negotiation and subsequent) • Attitude and Approach • In the detail • Impact on own company • Understand Regulatory implications

  11. Regulatory Involvement: • The Industry has a poor track record with managing regulatory risk • We are heading for “risk-based” supervision • Outsourcing = Risk

  12. Regulatory Involvement: • Regulatory obligations cannot be outsourced • Outsourcers must employ Approved Persons • Involve the Regulator • Adequate risk management controls must be demonstrated

  13. Impact on underwriting & claims • Increasingly likely to include outsourcing of • medical evidence collection • technical assessment • Outsourcing of whole of risk management cycle likely by some companies

  14. Drivers of underwriting and claims outsourcing • Market centralisation • Automation • on critical mass of underwriting teams • impact on development of underwriters • Specialisation/technical excellence

  15. Drivers of underwriting and claims outsourcing • Reinsurers • changes in service proposition • provision of outsourcing services • reinsurance structures

  16. Practicalities of outsourcing • Philosophy • familiarity • Cost control • Quality Control • Errors • who picks up the tab • liability cover for non-risk carriers……..

  17. Impact on outsourcing opportunities • Greater opportunities • Acceleration of time to market place for new products • acquisition of systems or skill sets • white labelling • outsourcing of back office • New and existing players

  18. Advantage Cost Service Outsourcing Underwriting Quality

  19. Advantages of Outsourcing • Pay as you use • Switch on – switch off • Flexibility of staffing • No additional management needs • No space issues

  20. Some benefits of outsourcing: • Better management information • Easier to manage • Could become a ‘virtual’ business • Increase product range

  21. The Future: • Outsourcing will grow further • Its scope will widen • Technological advances make it easier

  22. INFORMATION TECHNOLOGY What is Available today?

  23. INFORMATION TECHNOLOGY Semi-Intelligent Underwriting/Admin Systems • On Line Medical Tracking Systems • Real Time Underwriting Links(DELIUS) • Information Exchange (XML) • Legacy Information Exchange(EDI)

  24. INFORMATION TECHNOLOGY ISSUES with CURRENT SYSTEMS • Not intelligent enough • Expensive • Not integrated to other systems

  25. INFORMATION TECHNOLOGY How can Outsourcing & IT help with these Issues

  26. INFORMATION TECHNOLOGY Outsourcer’s can develop acceptable systems which allow cost effective outsourcing

  27. INFORMATION TECHNOLOGY FUTURE DEVELOPMENTS Intelligent Underwriting • Fully Integrated • Completely Flexible

  28. INFORMATION TECHNOLOGY ADVANTAGES • Cost Effective Underwriting End to End • Immediate Rapid speed of Issue • Lower NPW rate

  29. U/W SMART XML Info Exchange Database DELIUS HTML Remote U/W MEDITRAK THE UNDERWRITING SOLUTION Information Exchange

  30. UNDERWRITING Process Plan Application Smart System DELIUS MEDITRAK

  31. UNDERWRITING Process Plan Application Smart System DELIUS Broker Insurance Office Online application – sent electronically Application – electronic or imaged – sent electronically MEDITRAK

  32. Broker Insurance Office Online application – sent electronically Application – electronic or imaged – sent electronically UNDERWRITING Process Plan Application Smart System DELIUS MEDITRAK

  33. UNDERWRITING Process Plan Application Smart System DELIUS Office A Underwriting Philosophy Office B Underwriting Philosophy Office C Underwriting Philosophy Office D Underwriting Philosophy MEDITRAK

  34. Broker Insurance Office Decision sent electronically Decision sent electronically UNDERWRITING Process Plan Application Where decision can be made by Smart System Smart System DELIUS MEDITRAK

  35. UNDERWRITING Process Plan Application Where decision cannot be made by Smart System Smart System DELIUS DELIUS MEDITRAK

  36. UNDERWRITING Process Plan Application Smart System DELIUS MEDITRAK

  37. UNDERWRITING Process Plan Application Office A Underwriting Philosophy Office B Underwriting Philosophy Office C Underwriting Philosophy Office D Underwriting Philosophy Smart System DELIUS Underwriting Guides SURE LUIS etc MEDITRAK

  38. Broker Insurance Office Decision sent electronically Decision sent electronically UNDERWRITING Process Plan Application Where decision can be made by underwriters Smart System DELIUS MEDITRAK

  39. UNDERWRITING Process Plan Application Where further evidence is required by underwriters Smart System DELIUS MEDITRAK MEDITRAK

  40. UNDERWRITING Process Plan Application Where further evidence is required by underwriters Smart System Special tests Exam by doctors DELIUS Letters to GPs Exam by nurses GPRs MEDITRAK

  41. UNDERWRITING Process Plan Application Smart System DELIUS DELIUS MEDITRACK MEDITRAK

  42. Broker Insurance Office Decision sent electronically Decision sent electronically UNDERWRITING Process Plan And once decision can be made by underwriters Application Smart System DELIUS MEDITRAK

  43. SUMMARY If managed correctly……. Third Party Outsourcing is • Cost effective • Financially efficient and ‘’a good place to be”

  44. Questions Questions Questions Questions

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