Related Items
The Power of Expectations
June 2006From call centers to data centers, the insurance industry continues to turn to outsourcing in an effort to manage costs and secure access to resources. Information technology assets have become vital to ongoing operations and new growth, making these outsourcing relationships more than technology arrangements-they are now critical to business success. Combined with new regulatory mandates, this trend may be forcing carriers to push deeper and engage more proactively with outsourcing vendors.
IT industry analyst firm Gartner Inc., Stamford, Conn., calculates that outsourcing will capture up to 33% of all IT services spending across industries by 2008-up from 26% in 2003. The analyst firm also predicts the insurance sector will be spending more than $10 billion on outsourced services by that time.
Historically, the insurance industry is no stranger to the practice of outsourcing, relates David Greenwell, vice president of the insurance practice for The Revere Group Ltd., a Chicago-based IT consulting firm. "The insurance industry was an adopter of outsourcing even before it was called 'outsourcing,'" he says. "We started using TPAs [third party administrators] for claims and benefits processing dozens of years ago."
Now, the practice of outsourcing is rapidly encompassing processes involving all aspects of IT and management. Many insurance industry observers say the industry is increasingly relying on outsourcing services firms to handle functions such as call-center operations, application development, testing, e-mail and e-business, and help-desk operations. Often, these engagements extend well beyond technology management, addressing processes that are core to the business and need to be treated accordingly. "You have to wear several hats when you work with an outsourcing solution. In one manner of speaking you are the customer, yet your ability to directly drive or control results may be constrained due to the contractual agreement with the vendor," says Rod Chamberlain, associate vice president for Farmers Insurance Group of Cos., Los Angeles, Calif.
"Technology is now a vital enabler of how we do business," says David Gordon, director of the outsourcing advisory practice for PricewaterhouseCoopers LLP, New York. "Your enterprise architecture is a key component of how successful you're going to be. IT is now core to businesses and creates value for the organization."
A recent report from LOMA, Atlanta, Ga., concludes that the practice of both outsourcing and offshoring has been rapidly rising and will have a huge impact on business operations in the years to come.
Ryan Savage, director of life and annuity application outsourcing for Computer Sciences Corp. (CSC), El Segundo, Calif., agrees with this assessment, noting that he has seen a significant rise in offshore outsourcing in recent years in his practice area. Savage says nearly all business processes can be broken down into manageable "chunks" that more easily lend themselves to outsourcing and offshoring arrangements.
"If you look at a total business process, you may think you can't offshore that," he says. "But if you start to chunk it, you can really offshore a lot of it for different reasons." A payment process, for example, would be cumbersome to administer offshore, but the various components that make up the process can be divided, he illustrates. "Once the money gets into the account, you can look at how the actual premium application visits the transaction system."
For more information on related topics, visit the following channels:
Vendor Spotlights
- About Us
- Advertising Media Kit
- Reprints
- Editorial Calendar
- Contact Us
- Customer Service
- Privacy Statement
©2008 Insurance Networking News and SourceMedia, Inc. All rights reserved.
SourceMedia is an Investcorp company.
Use, duplication, or sale of this service, or data contained herein, is strictly prohibited.
