European Life & Pensions outsourcing about to take off?
News that Accenture Life Insurance Services has won an eight-year business process outsourcing (BPO) agreement with BNP Paribas Cardif may be a sign that the European life insurance and pensions market is set for increased outsourcing activity.
According to Accenture’s press release, “Accenture will manage an important portfolio of BNP Paribas Cardif’s group life insurance policies business in France, including the administrative management of the insurer’s call centres and ancillary accounting operations.”
“The life insurance industry is undergoing fundamental change, driven by increased regulation and risk management pressure and more volatile markets,” said Daniele Presutti, managing director of Accenture Life Insurance Services. “This provides an opportunity for some insurers to gain market share. Outsourcing can help them strengthen capabilities to reach their objectives.”
Services to be provided by Accenture include policy administration; call centre services; ancillary accounting and enhancement of the current life processing platform. BNP Paribas Cardif, the life and property & casualty insurance subsidiary of BNP Paribas, has a strong international focus generating nearly half of its premiums outside of France, with a particular focus on emerging markets including Taiwan, Russia, Ukraine, Turkey, Brazil, Chile & India. Insurance is sold principally through intermediaries and bancassurance channels.
This announcement comes at a time when the UK market has reached relative levels of saturation and maturity, with the larger players such as Phoenix, Resolution,. Prudential and Co-operative Financial Services having previously outsourced the administration of their books of business to the likes of Diligenta and Capita. Capita has a strong record of contract wins in the sector and says it has approximately 22% of the total UK market for insurance clients such as Zurich Financial Services. The other main UK player is Diligenta (part of TCS) and has impressed recently with its successful consolidation of multiple legacy systems onto a single integrated cloud-based system based on the TCS BaNCS Insurance platform, as well a recent contract wins with Friends Life. Further, in 2010, Diligenta also took over the L&P business of Unisys picking up work for Old Mutual in the process.
The press release makes no mention of any staff transferring to Accenture under the Acquired Rights Directive, legislation which aims to protect employees when businesses are restructured including outsourcing, but which often adds complexity, cost and risk to the execution of an outsourcing transaction, especially for services crossing country borders. One interesting detail is that the scope of the Accenture/ Cardif deal includes new insurance business, whereas in the UK, many of the third party administration deals focussed on the outsourcing of processes in support of closed books, coupled with aggressive cost saving models, following the aggregation model pioneered by Clive Cowdery’s Resolution and subsequently taken up by Phoenix Life and others.