Insurance Outsourcing To Grow
By Daniel Hays
NU Online News Service, Sept. 13, 1:50 p.m. EST, Orlando?The key insurance industry management trend in the future will be growth in the outsourcing of operations, a former company head told a gathering of claim and technology professionals here.
The forecast came from Dennis Chookaszian, retired chairman and chief executive officer of CNA Insurance, speaking at the Annual Conference and Exposition here. The conference is presented by Claims magazine (a publication of The National Underwriter Company) and the Society of Claim Law Associates.
Mr. Chookaszian said that outsourcing has been growing at double-digit rates, anywhere from 10-to-18 percent. He said this trend as it evolves will result in shorter durations for outsourcing contracts and much more specialized terms.
He also warned that full outsourcing of operations has a very high failure rate, and that outsourcing works better when it is directed to specific functions of a company.
Mr. Chookaszian cited four key points that lead to a successful use of outsourcing. He said there should be:
? A strong outsourcing leader.
? Clear business objectives.
? A qualitative contract with set goals.
? Frequent communication with the outsourcing provider.
The industry, he noted, has been under increasing pressure for profitability in terms of quarterly results. He added that this pressure will prompt "more and more usage of specialized services" to cut costs. He also stated that the use of outsourcing "will help you improve profitability."
Mr. Chookaszian further noted that the industry has been impacted by a dramatic change in asset management, and that it faces lower rates of return on investment, which adds to the pressure for profitability in its insurance operations.
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