Insurance carriers were originally attracted to outsourcing and offshoring by the potential for significant cost reduction in back-office activities such as claim processing. However, as confidence in these arrangements has grown, as providers have become more sophisticated, and as insurers have faced a challenging economic and competitive landscape, it has become clear that efficiency improvement in the back office is not enough. Offshore providers can now offer many more value-added services cost effectively, and carriers are starting to take notice.

Thriving in this new environment requires a fundamental shift in carriers' philosophy away from the use of offshoring for cost reduction purposes alone. Instead, offshoring must be evaluated as nothing less than part and parcel of insurers' strategic efforts to increase growth and profitability.

The State of Offshoring

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