Revisiting the Outsourcing Debate
Despite being a mature practice, many insurance leaders can be reluctant to outsource their business operations. But rising labor costs, heightened client demands for faster service, and the need for digital transformation are making it increasingly difficult to justify preferences for in-house operations. With the right outsourcing strategy in place, insurance leaders can mitigate risk and garner real rewards – like elevating the client experience and capturing more market share.
Essential Considerations for Successful Outsourcing
There are five essential factors every insurance leader should consider before committing to outsourcing.
Choose the Right Outsourcing Partner
Selecting the right outsourcing partner is crucial. Choose partners with a demonstrated track record in the insurance industry, expertise in your outsourcing functions, and a commitment to quality and compliance. Always request references and evaluate their capabilities before deciding.
Define Clear Objectives and Expectations
Identify the tasks and functions you want to outsource and establish measurable goals. Communicate these objectives to your outsourcing partner and ensure they understand your requirements.
Define Strong Contracts and Service Level Agreements (SLAs)
Implement firm contracts and SLAs with your outsourcing partner to mitigate risks and ensure accountability. Clearly define the work scope, performance metrics, and expectations. Include provisions for regular reporting, quality assurance, and dispute resolution.
Establish Robust Communication Channels
Establish regular communication channels with your outsourcing partner to monitor progress, address issues, and provide feedback. Regular meetings and performance reviews ensure the partnership stays on track when delivering the desired results.
Monitor Performance and Adapt
Continuously monitor your outsourcing partner’s performance to ensure they meet your objectives. Track key performance indicators and conduct regular evaluations. Be open to feedback and adapt your strategies to optimize the partnership.
The Real-World Rewards of Outsourcing
These real-world examples demonstrate the powerful results of successfully implemented outsourcing strategies.
Case Study 1: Streamlined Employee Benefit Processing
A senior vice president of benefits consulting at leading general health insurance agency wanted her account managers focused on client engagement and retention. Through a rigorous time study, the agency concluded that eligibility processing was a significant pain point, particularly mid-year changes. Account managers spent roughly 50% of their time pulling elections from the agency’s benefits administration platform, verifying the correct information, submitting to health insurance carriers and following up.
The agency’s efficiency challenges increased when COVID-19 pandemic forced employers to reduce staff headcount. By partnering with a reputable outsourcing provider, the agency streamlined operations and increased new client capacity by 25% per account manager without adding additional staff headcount.
Case Study 2: Improved Policy Holder Retention and Satisfaction
Sidle Insurance & Risk Management knows firsthand the challenges created by a tight supply of skilled workers. Account managers spent more time in the back office than servicing the book of business, which motivated agency leadership to explore outsourcing certain tasks to a virtual assistant. In 14 days, the virtual assistant eliminated office backlog, enabling Sidle’s account managers the capacity to focus on reviewing renewals and writing new business. As a result, policy and customer retention improved, and new business numbers improved as well.
Case Study 3: Expense Reductions Unlock Future Investment Capital
Bolton Insurance, a rapidly growing MGA found itself in a position where the sophistication and degree of service they were providing was evolving faster than its internal processes that support the business. Bolton leveraged outsourced insurance processing and small account management services and saved $432,000 in expenses, unlocking future investment capital.
Conclusion
Outsourcing can be a game-changer. It offers a strategic solution to talent shortage challenges, technological uncertainty, client attrition, and non-revenue-based activities. Agencies that embrace outsourcing can gain speed, reduce expenses, grow, and innovate their operations. It’s time to move away from the old way of thinking and embrace the future of insurance agency management. Outsourcing is not a risky move—it’s a strategic decision that can transform your agency and set it on the path to sustained success and growth.
About Patra
Patra is a leading provider of technology-enabled outsourcing services and software solutions to the insurance industry. Patra powers insurance processes by optimizing the application of people and technology, supporting insurance organizations as they sell, deliver, and manage policies and customers through our PatraOne platform. Patra’s global team of over 6,500 process executives in geopolitically stable and democratic countries that protect data allows agencies/brokerages, MGAs, wholesalers, and carriers to capture the Patra Advantage – profitable growth and organizational value.
