Why Insurers Are Replacing BPO with AI
Outsourcing is Dead, Long live Insourcing to AI For decades, outsourcing has been a popular strategy for re/insurers to cut costs and improve service. However, we fundamentally question if traditional BPO is still a valid model in the age of AI and more importantly, does it risk becoming a strategic drag on your business as others automate and enhance their business with AI? The trouble with traditional outsourcing While outsourcing has been tactically effective in delivering cost savings and scaling the workforce, several macro and strategic challenges are making it less appealing: Race to the bottom: Intense competition means high SG&A cost and less margin to hire top talent and to train them well. Increased work pressure leads to low morale, high attrition, and poor accuracy/knowledge level. Misaligned incentives: Outsourcers often lack top tech talent to build good AI and their commercial incentives and management KPI are to keep billed headcount high. Strategic limitations: ...