Claims management business process services and software firm, The Innovation Group (TIG), has just signed the biggest contract in its history with RBS Insurance (RBSI), according to its CE Andy Roberts, worth £40m over the next three-and-a-half-years (£11-£13m per annum). I spoke with Roberts about the deal, which he said should add 5% to TIG’s forecast revenue in FY12 (FY12 commences on 1 October). Roberts is rightly pleased with the win, and said it underpins his confidence in expectations for FY12 and beyond. The announcement sent TIG’s shares up almost 7%.
The deal itself, which was won against stiff competition, sees TIG TUPE’ing over between 25 and 30 RBSI people, and assuming responsibility for RBSI’s new subsidence claims and 70% of its existing subsidence claims. Roberts says that the back end processing runs on TIG's Insure Claims 7.0 software platform, which is also the base for its BPaaS (business process as a service) platform, Enterprise. TIG will charge RBSI on a ‘fixed per-claim pricing structure, fully backed with reinsurance”, which Roberts says makes the model very clear, since TIG reinsures its clients with data backed up by its own knowledge of costs. This is exactly the kind of BPS contract we pointed to in our BusinessProcessViews report Business Process Services: Market Trends & Forecasts 2011 that enables the client to have an outcome-based contract – in this case RBSI gets certainty over its claims reserves and indemnity spend.
This BPaaS model should in theory become more profitable for TIG too. However Roberts points out that this will not happen overnight, for instance there are the associated start-up costs related to TUPE and hiring onto the contract. Also R&D costs associated with further developing and maintaining the platform will also likely have to rise. These are all challenges for TIG, and its competitors, as they seek to make the BPaaS model sustainable for the long term.