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Invisible Assets

Advances in connectivity and workflow technologies and a maturation of capabilities in the provider market have made the virtual insurer model possible. But while handing off specific functions using

By Michael P. Voelker | Updated on June 30, 2007

For all the controversy that has surrounded outsourcing in recent years, Scott Hawkins makes an interesting point, namely, insurers have been outsourcing some business processes since the first independent agent began doing business. “You really saw the first breaking down of the [in-house] business model with the use of noncaptive distribution,” argues Hawkins, who is an analyst at Conning Research & Consulting.

Advocates of business process outsourcing (BPO) cite its advantages for carriers–the ability to: respond to new business opportunity without the build-up time needed to bring on additional staff; replace fixed infrastructure expenses with variable costs that directly relate to business demand; move employees from mundane tasks to challenging and revenue-enhancing activities. “Virtual” insurers have become the biggest users of BPO, willing to outsource all but the most essential, image-defining processes to third-party providers.

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