Insurance OutSourcing

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By Admin | October 28, 2008 -->1,165 views

Insurance outsourcing is growing phenomenally, according to a new case study. A report done by the Brown-Wilson Group on the insurance industry finds that more than 75% of international insurance companies, outsource their activities to an IT outsourcer.

The insurance sector is currently occupying 33% in outsourcing activities. This figure is expected to enhance further in the coming years. There are several reasons as to why insurance companies are seeking outsourcing as a good business strategy, but the foremost reason is cost effectiveness.

Outsourcing benefits insurance companies in many ways. They gain by way of cutting down on operational costs, getting back-end activities carried out by professionals and being able to give excellent customer service. The many benefits of insurance outsourcing can be better understood using an example. Here is a real life situation on insurance outsourcing.

Universal Insurance of North America is a company whose origins are in Puerto Rico. The objectives of Universal’s U.S. Property and Casualty Group was to expand their insurance services across the United States. In order to successfully carry forth their business plan they decided to outsource all of their backend activities . They chosen outsourcer was CGI.

Their tie up with CGI, a provider of information technology and business process services, gave them good returns. CGI, provided the perfect organizational expertise, which complimented their excellent spectrum of products and services.

By outsourcing, Universal’s U.S. Property and Casualty Group, was able to quickly set up their offices in the United States, thus achieving their business objective. They also expanded their operations to many other states. Currently, they have operations in Florida, South Carolina, and Texas. In doing so, they profoundly expanded their business plans.
In all the areas where they set up operations, they are able to efficiently provide a variety of insurance services. This includes home insurance, fire insurance, condominium insurance, renter’s insurance and much more.

However in order to achieve a success story like the one above, a lot of thought has to go behind the outsourcing deal. Both parties to an outsourcing agreement must fully understand all the areas they have to deal with. It should ‘not be a case of full control or negligent control’ of operations to the outsourced firm. Control over operations should be a diligent balance. It is only when such balances are achieved through continuous process assessments that the complete benefits of outsourcing can be accrued.

In short, insurance outsourcing promises all the benefits of outsourcing in general, which are reduced costs, increased productivity, better work management and a professional touch. However, both parties in an outsourcing deal must clearly map out their responsibilities and upgrade to enjoy the benefits of outsourcing to the fullest extent.

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