Case study: how Pearl Assurance gained from outsourcing

With four million policies and £27bn worth of funds, Pearl Group represents almost a fifth of the UK long-term insurance sector.

One of the biggest challenges of the insurance business is managing regulatory changes.

‘We grew by acquisition,’ says Tony Kassimiotis, chief operating officer, Pearl Group.

‘And although we combined processes and centralised our operations in Peterborough, migrating both people and systems from Tunbridge Wells and Bristol, we were still left running 11 core IT platforms.’

With closed life insurance funds, as policies mature or are surrendered the number of policy holders decline. ‘It is a common problem in the industry – we manage fewer policies, but the fixed costs remain the same,’ says Kassimiotis.

‘We wanted a strategy that would allow for the declining business, manage regulatory risk and transform our information systems, while providing all this at a competitive price that benefits our policyholders as well as our business.’

Having considerable experience of selective outsourcing in the areas of IT infrastructure, application development and elements of customer management, Pearl decided that a full operational outsourcing option would give them the anticipated benefits.

In a deal acknowledging that large financial service business process outsourcing deals cannot be serviced entirely offshore, Pearl Group chose Indian outsourcing supplier TCS and its recently formed UK arm Diligenta.

In return for the 12-year, half-a-billion-pound deal, TCS has leased Pearl’s Peterborough building, taken on 950 of Pearl’s staff and guaranteed Pearl a fixed price for each policy, while committing to building a centre of excellence for the administration of life and pensions.

‘It is our intention to become recognised as a global supplier in certain chosen sectors not just as an Indian offshore outsourcing company,’ says David Power, chief executive of Diligenta.

‘To service the UK life assurance sector it was essential to have an onshore presence.’

For Pearl, the benefits include transference of risk, lower cost of managing a declining number of policies and a high quality of service for its customers.

Pearl also wanted an outsourcer that could provide its staff with career opportunities.

‘This was not a knee-jerk reaction, but a strategic decision,’ says Kassimiotis. ‘We are aiming for the lowest-cost platform for managing our life assurance business and we spent a lot of time understanding how TCS was going to deal with the problems we were giving them.

‘It is a 12-year contract because we believe that it is difficult for an outsourcer to come in and do things better, faster and cheaper unless they transform the model on which you are already operating.’

Further reading:

Reverse trend - why companies are rethinking outsourcing