1. Start with a systematic assessment of what to outsource and determine the scope of the outsourcing initiative. Insurance companies of every size can potentially benefit from bringing in an outside provider.
2. Develop a good business case around outsourcing that looks at your current and future spend and how outsourcing can make an impact. “Then make sure you have the ability to track that at a granular level so you can preserve your business case,” says Daan De Groodt, an Atlanta-based principal with Deloitte’s outsourcing advisory practice. “The most successful deals are those in which the outsourcing initiative has strong support within the organization at the business and executive level.”
3. Do your research up-front. Take your time assessing the various strengths and weaknesses of potential outsourcing vendors.
4. Make sure your company is compatible with the service culture within your outsourcing company. Ensure that the vendor’s values are aligned with your insurance organization. It’s critical that you are confident that your clients will get the customer experience that you want them to have.
5. Determine the scope of the relationship. Are you looking to have the service provider just provide you with a service? Or are you looking for help with business results? “You can contract for some of that, but not all of it,” notes John Albanese, VP, CSC Financial Services Group (Austin, Texas). “The working relationship an insurer’s executive team has with the outsourcer is what provides value add above and beyond what’s in the contract.”
[What’s In Your Contract? 6 Steps to Creating a Better Outsourcing Partnership.]
6. Be sure your insurance organization and outsourcing company are focused on and motivated by the same goals. Says Strategy Meets Action (Boston) partner Karen Furtado, often there’s a misalignment of the business strategy and goals of the relationship. “Focus attention on what’s really important and don’t get distracted by measuring things that are important but not critical to the arrangement,” she offers.
7. Keep an open dialog with vendors and make sure that you stay in touch constantly. “We’re pestering our outsourcing company, CSC, all the time, and we expect them to answer us very quickly,” says Mike Toran, CIO of Starr Companies (New York).
8. Hire or designate the right people to oversee the vendor relationships, and make sure there is appropriate reporting and checks and balances around the outsourcing relationship.
9. Develop monitoring metrics, feedback and service levels to understand and judge the performance of outsourcing vendors. “Overall governance of the sourcing arrangement is important in order to make sure that, longer term, it still makes sense for the company, so that [you are] not just putting an outsourcing relationship in place, but continually re-evaluating, in order to make sense on an ongoing basis and long term,” says Martina Conlon, Boston-based principal, insurance, with Novarica (New York). “With this continual assessment, you can fine-tune the relationship and make changes as you go along.”
10. Consider starting small and ramping up. "Insurers don’t have to make a big commitment all at once," advises CSC’s Albanese. "They can try it before making a major commitment, or move through the various models backwards and forwards, depending on where they are with company strategy, direction and priorities. Insurers can get their feet wet without jumping in all at once. Once insurers have the experience of working with an outsourcer and understand its level of insurance expertise, they can make more of a commitment."
Peggy Bresnick Kendler has been a writer for 30 years. She has worked as an editor, publicist and school district technology coordinator. During the past decade, Bresnick Kendler has worked for UBM TechWeb on special financialservices technology-centered ... View Full Bio