Computer Sciences Corporation (CSC) today launched an outsourcing service for the beleaguered UK life and pensions industry which it says is “capable of halving the cost of administering pensions and life assurance.” If so, it will save the sector 1 billion a year.
So what is it? In fact, the plan is simple. CSC will use its financial processing centres in Nodia and Indore in India and in Cape Town, South Africa, to manage the policy processing and administration for UK life and pensions providers. These will be connected to the UK by CSC’s global high security network. CSC estimates these low cost processing centres can shave 30-50 per cent off administration costs. CSC says it employs staff in these countries ready to manage the business.
“Falling equity markets have severely challenged the Life and Pensions industry and have forced providers to review their business,” says Andy King, CSC’s Head of Business Process Outsourcing (BPO) for Financial Services EMEA. “This has led to them closing their books to new business, cutting back on staff or considering hikes in premium. Whilst these actions deliver short term benefit, we believe that if the industry is to fully recover, new ways of doing business must be looked at, particularly to reduce the huge amount spent on back office administration. Policyholders can be confident they will receive the same customer service they’re used to. However, they will have the added assurance that a higher proportion of their premium will be invested for their benefit and not spent on administration.”
CSC has been present in South Africa since 1999 when it signed a seven year US$300 million Managed Service contract with Old Mutual Life Assurance Company South Africa. CSC has been in India since 1997. Today, the combined operations in South Africa and India employ more than 1300 staff working in Financial Services.
There are 65 million life and pensions policies in the UK, representing a total annual premium income of 92 billion. Of this, more than 12 billion is spent on management expenses and commission. CSC has over 200 global insurance outsourcing clients, and manages 16 million insurance policies on an outsourced basis for clients – this represents US$14.3 billion in premium income.