Outsourcing Allows Agents and Brokers to Focus on Core Competencies

By Anthony R. Chase | July 19, 2004

Increased customer satisfaction, reduced overhead

When an operational limit is hit, insurance agents and brokers often turn to outsourcers. They may need to increase their physical capacity to handle new customer relationships but are reluctant to spend millions of dollars on more staff, office space and hardware. Outsourcing means insurance agents and brokers don’t have to invest vast amounts of money to employ, train, manage and maintain the latest advances in customer relationship management services and infrastructures with expensive in-house IT and service departments.

Insurance agencies and broker groups are increasingly outsourcing functions such as customer relationship management, 24/7 back office processing and service, claims and collections. Of course, agents and brokers are naturally wary of entrusting their most important asset—their customers—to a third party. Outsourcers are well aware that the two most important assets in the insurance business are its brand and its relationship with its customers, both of which must be handled with extreme care.

However, some firms find that large in-house investments in people, facilities and technology for services that could otherwise be outsourced provide little guarantee of profitability and detract from the bottom line. For instance, one company spent $2 million on high-technology hardware and software to establish its own call center and began hiring hundreds of people to staff it. After a year of continuous challenges, management abandoned the effort and turned to outsourcing.

Within the first year of outsourcing an agency can achieve a 15 percent to 30 percent savings by deploying certain core processes. A large telephone company began outsourcing the management of a customer relations group and within three years grew a 10,000-business client base by 20 percent. Today the outsourcers manage over 150,000 small business customers for that client.

An experienced outsourcer should be able to interface with a legacy system and manage both existing and potential customer relationships in all areas. The outsourced call center can administer both the technology and human resource functions, increasing customer satisfaction and retention at a lower cost.

A good barometer for measuring the success of an outsourcing agreement is the seamlessness of the line between the client and the customer relationship manager. The customer should not be able to distinguish that they are dealing with an outsourced call center as opposed to the insurance agency’s own employees. So, the insurance agency must give the outsourcer sufficient access to its internal information systems. The outsourcer’s sales and marketing associates must be trained to mirror the corporate culture of the institution they are serving, answering and generating calls precisely in the same manner that the client would.

And outsourcing usually improves an agency’s contact services because the outsourcers are more motivated to stay abreast of all new product and service offerings to a degree that an agent or broker’s employees might not.

The outsourcer should not offer a one-size-fits-all package. Its infrastructure should be tailored to reflect the profile of the customer, not the reverse. Each service should entail a technology/training initiative specific to the client, culture and product focus.

Insurance agencies are requiring the outsourced call-center staff to be flexible. So, the outsourced personnel must be able to switch from placing an outbound call to suddenly being available to receive an inbound call and handle both with aplomb. In the past, clients typically had divided the two functions, using one outsourcing group for inbound and another for outbound calls. But a call center should be able to quickly turn off the outbound route and turn on the inbound route to ensure that all functions are satisfied and no customer is turned away.

Another trend is the move by agents and brokers to outsource their back office processing, order entry, order provisioning and data provisioning functions. Outsourcing is particularly useful for transactional functions. Often a company will have two disparate technology platforms as the result of a merger or acquisition. A human interface is needed to read the information from point A and type it into point B.

Agents and brokers are increasingly outsourcing portions of their after-hours support functions as well. This is becoming highly popular with customers who often are more apt to telephone in the evening when it’s more convenient for them rather than during normal working hours.

Further, agencies should seek outsourcers who are Six Sigma certified. Six-Sigma uses a data-driven approach and methodology to eliminate the defects in a process, placing a priority on satisfying the customer’s needs above all else.

The insurance industry, like other industry sectors, has discovered that outsourcing reduces costs through improved use of facilities, higher productivity and better personnel management. It allows agents and brokers to improve strategic service offerings and full-cycle customer interaction.

In the increasingly competitive insurance industry, the winners will be those firms that narrow their definition of core competence and outsource services such as customer relationship management.

Anthony R. Chase is chairman and CEO of ChaseCom L.P., a Houston-based provider of customer relationship management and technology support for Fortune 100 companies. For more information call (713) 874-5800 or view www.chasecom.net.

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Insurance Journal West July 19, 2004
July 19, 2004
Insurance Journal West Magazine