Outsourcing Property Insurance

Insurance companies are quite traditional in conducting their business. In all their business transactions, they employ the same conservative attitude and tradition-bound ideas. Their conservatism and traditional outlooks affect the way they invest the premiums they get from policyholders. This fact is rather ironic when you think about the nature of their jobs.

Insurance companies are the key aspects in an industry where quantifying risks is considered part of the job. It is their function to offer as much financial security as they could to their clients. How come then that outsourcing property insurance is considered too risky?

Many insurance agencies defend themselves by saying that it is a time-honored tradition to keep business processes to themselves and outsourcing property insurance does not necessarily fall into that category. This is not to say however that outsourcing property insurance does not get a bit of share in the competitive market.

Although a relatively new concept, outsourcing property insurance is beginning to increasingly gain popularity among insurance companies. These companies who embrace the idea of outsourcing property insurance have grappled the fact that business always involves risks. So why not join the outsourcing property insurance market?

Indeed, outsourcing property insurance is not without its benefits. Industry insiders are predicting double-digit increases for 2003 due to the increasing popularity of outsourcing property insurance. With the degree of competition in today’s markets, companies are willing to squeeze in anything into their operations if it means increasing their efficiency in delivering goods.
Outsourcing property insurance is the way to go if it is a question of survival.

Outsourcing Property Insurance – Transcending Traditions

Based in McHendry Illinois, Member Insurance Agency offers insurance products and services for their clients in the hardware and building material industry. Wayne Fell, president and CEO of Member Insurance, states that it had taken some time for their company to finally accept the idea of outsourcing property insurance. “Nobody can do this better than we can” is the kind of traditional thinking that keeps large companies like Member Insurance from accepting the idea of outsourcing property insurance.

Finally though, by 2000, Member Insurance transferred their customer service to an outsourcing property insurance company. According to Fell, outsourcing property insurance is a form of specialization. “Just because you’re good at underwriting and you’re good at selling, it doesn’t mean you’re good at doing the paperwork,” Fell says by way of explaining why they opted for outsourcing property insurance.

And for most insurance companies who have adopted outsourcing property insurance, the trend is natural. Outsourcing property insurance has become a by-product of the competition in the market.

The Market is now open to outsourcing property insurance

More and more insurers are looking at outsourcing property insurance with a clearer vision. A research firm in Stamford, Connecticut, Gartner, Inc. found out in October and November of 2001 the extent of outsourcing property insurance in U.S. insurance carriers. According to their research, which used 114 U.S. insurance carriers as basis, 51 per cent of life and health insurers are outsourcing property insurance. In addition, outsourcing property insurance is done in 48 per cent of property and casualty insurers.

Industry insiders believe that the driving force of outsourcing property insurance is the Internet. The number of insurance companies selling Web-based products has placed much pressure on their company’s IT departments. The solution? Outsourcing property insurance.