ReSource Pro

Epstein, formerly ReSource Pro's vice president of business development, takes over the CEO position from David Watkins, who will become chairman of ReSource Pro.

ReSource Pro, LLC, based in New York City, is a remote staffing firm that specializes in back office insurance processing for insurance program managers, managing general agents (MGAs), and retail agents.

Over the last year, ReSource Pro says it has expanded its data processing staff in Qingdao, China, from 35 to almost 100 people and is anticipated to double in size in the coming year. It also has expanded its Qingdao office space.

Before joining ReSource Pro in 2005, Epstein was president and executive director of US-IBEX, which facilitated business partnerships between foreign technology companies and U.S businesses. He holds an M.B.A. from Columbia Business School and the London Business School, a master's degree in International Relations from the London School of Economics and a bachelor's degree in political science, from Brunel University, London.

Along with Epstein, the senior management team at ReSource Pro is comprised of Matt Bruno, managing director of China operations and Laura Downey, director of client integration.

What Lies Ahead
A blue ribbon panel eyes the future of the independent agency system

In the property/casualty business, as in any industry, pundits and prognosticators are a dime a dozen. A lot of self-styled experts toss opinions around like confetti, but a few wise heads possess the clarity of vision to see into the likely future.

Nine such savants were on hand to offer their views to attendees at the IMMS/Group 500 Annual Conference presented by Insurance Marketing & Management Services (IMMS) in May. Held in Chicago, the conference focused on helping agents, brokers, and other insurance professionals develop a network of valuable contacts in the business.

A highlight of the event was a panel discussion moderated by George Nordhaus, founder and chairman of IMMS/Group 500. The panelists represented a broad cross section of the property/casualty business: Roger Looyenga, CEO, Auto-Owners Insurance Group; Robert Sargent, president, Tennant Risk Services; Mark Manfre, executive vice president, Insurance Office of America; Dan Carmichael, CEO, Ohio Casualty; Dan Epstein, president, ResourcePro; William Hold, cofounder and president, The National Alliance for Insurance Education & Research; Frank Burke, president and CEO, First Insurance Funding; Mike Schroeder, president, Roundstone Insurance; and Al Diamond, president, Agency Consulting Group.

Increase in demand by insurance program managers, MGAs and retail agencies for remote staffing prompts ReSource Pro to double staff and plan additional expansion
ReSource Pro, LLC ( www.resourcepro.com/info ), a Remote Staffing firm that specializes in insurance processing for insurance program managers, managing general agents (MGAs), and brokers and agents, announced today that it more than doubled its data processing staff over the last 12 months in response to increasing demand for it services.

The company is planning another significant expansion of data processing staff and facilities by year-end 2006.

"The strong demand for our services is proving that remote staffing is an excellent solution for any insurance agency that is seeking ways to improve productivity, reduce operating costs and solve staffing bottlenecks," said Dan Epstein, vice president of business development for ReSource Pro. "Our client base is growing rapidly with several potential clients entering Remote Staffing trial phases."

Remote Staffing Provides Margin Relief in a Soft Market

Many agencies are seeing their profit margins squeezed by the current soft market. And according to a recent Property-Casualty forecast by Conning Research & Consulting, the market is showing no signs of turning. This forecast predicted continued softening, increasing competition and accelerating price competition in most lines through 2007– despite the 2005 hurricane activity that mitigated price competition in severe windstorm exposed areas.

New competition is jumping into many commercial markets to try to gain market share, often under-pricing business to meet short-term premium goals. This resulting decline in rates can put pressure on an agency's margins, your revenue and profitability. To maintain profitability, agencies must write more new business or cut expenses.

When you look to cut, you may look at your marketing budget. But trimming the marketing budget can be counterproductive when you need to write more businesses just to maintain the same revenues.

You may look at technology. Automating more of your processes can reduce expenses in long-term. But automation will take a major upfront investment that can be difficult to swallow in the current market.

You may look at staffing, but how can you cut staff when you're trying to increase volume?

Let's examine staffing more closely, starting with your producers. You need your producers to write more business, but their inevitable focus on processing tasks will be an increasing distraction – entering new business applications into a system, reviewing the completeness of submissions, rating and evaluating risk, providing quotes, billing and more. They may be so bogged down with repetitive tasks that they cannot put the time they need into sales and retention.

Filling administrative positions to fulfill processing requirements can be costly and difficult, especially in some markets. This was the dilemna faced by Paul Hanson Partners (PHP), a Napa, California agency that specializes in insurance for the transportation industry. PHP has grown between 18 and 25 percent for the last five years and this growth created a considerable backlog of work, necessitating overtime and putting staff at risk for burn-out. But finding additional staff was not easy.

"Napa isn't a major metropolitan area," says Lisa Paul, PHP president and CEO. "Good people are hard to find. The challenges associated with managing, recruiting and training, in addition to implementing and expanding our programs are all significant hurdles."

PHP turned to remote staffing, an effective, low-cost solution to staffing and productivity issues. Remote staffing frees up producers and underwriters and relieves the processing bottleneck, thereby improving productivity and lifting sales. It also lifts operating margins – the cost of the remote processing staff is only 40 to 60 percent of the cost of agency staff, representing net gains for the agency.

How does remote staffing work?

At ReSource Pro, our remote staff is located at our data processing center in Qingdao, China, a modern city with a well-educated, but low-cost labor pool. When we sign up a new agency, our staff travels to meet with them and learn their systems. So this is not traditional outsourcing. We become their remote staff, adapting to existing workflows, systems and procedures. This process requires virtually no upfront costs to get started and affords a huge level of comfort to organizations that are already stretched thin.

Each Chinese team is paired with only one client, so they can become an expert in that client's systems and procedures. This also enhances confidentiality and security. Plus, data never leaves a client system. We're connected remotely to the client system and working within their system. There is nothing on any hard drive in China.

Clearly, remote staffing is a solution to the margin pressures of a soft market. But it is also a long-term solution that lowers your expense base, improves productivity and returns producers and underwriters to the high-value work of new business development and real-time customer service.

The Night Shift
ReSource Pro helps MGAs add hours to their day

Uh-oh. Fifteen thousand D&O policies to rewrite and three months to do it. That was the task that confronted New York City-based Distinguished Programs several years ago when the carrier that underwrote the program went bankrupt. At about the same time, Matt Bruno, one of the top underwriters at Distinguished Programs, an insurance wholesaler, realized his dream of moving to China. But Bruno wasn’t actually leaving Distinguished Programs.

In China, Bruno discovered that he could connect via the Internet directly to the Distinguished Programs system the same way that anyone would connect from the road. He recruited some local college graduates to assist him in processing some of the accounts he was working on. His new hires learned the processes quickly and were precise in carrying out their duties. This led Bruno to think about what other tasks they might be able to help with. It wasn’t long before Distinguished Programs reviewed its processes and procedures to identify routine tasks that could be sent to Bruno and his Chinese team. And it wasn’t long after that that the formal China operation, based in Qingdao, was established.

The scene changes to Napa, California, where Paul Hanson Partners (PHP) is based. Since opening its doors in 1993, the agency has specialized in insurance for the transportation industry. In 1998, PHP established a program administration division and created a property and casualty program for moving and storage companies called Mover’s Choice, underwritten by AIG.

Seven tips for successful process outsourcing and boosting productivity

Outsourcing often receives a bad rap, with large corporations using it to reduce staff count, bureaucracy and overhead. However, for small- and medium-sized insurance agencies, outsourcing can be a valuable, even critical, tool to facilitate cost-effective growth and stimulate productivity. That is particularly true when experienced staff are difficult to find or expensive to hire.

Imagine insurance underwriters and producers spending time on routine data entry, rating, invoicing, ordering and reviewing inspections and motor vehicle records, generating loss runs, and issuing policies. An agency's knowledge workers are overqualified and overpaid for many of those tasks. Experience shows that it is far more profitable to deploy staff on new business development and renewals -- activities that require high-level interpersonal skills and risk control judgment.

The question is how to outsource the routine, repetitive components of an agency's back office while preserving the integrity and security of the agency, boosting competitive advantage in areas such as service quality, promoting staff morale, lowering costs and facilitating growth with minimum disruption to agency operations.

The following seven lessons address those critical issues and represent steps that all agencies should go through when conducting due diligence on insurance process outsourcing.

1. Outsourcing equals growth, not downsizing
The New York Times Columnist Thomas Friedman said it best in his recent best selling book, The World is Flat: "The best companies outsource to win, not to shrink. They outsource to innovate faster and more cheaply in order to grow larger, gain market share, and hire more and different specialists -- not to save money by firing people."

In agencies where people are valued and experienced, the goal is not to downsize and cut costs, but to make the best use of their time. By outsourcing routine tasks, agency costs can be reduced, liberating resources that can be deployed more productively.

2. Keep control of systems and security
In traditional business process outsourcing, companies offer cost savings by shifting the customer onto its agency management system, which can operate faster, quicker and cheaper than if the company did the work itself. The problem is that if the relationship falters due to price increases or a decline in the quality of service, the agency is stuck, lacking both the systems and the people to run critical back office functions.

A new approach is to have the outsourcing company connect remotely to the company's system, learning the processes, following its procedures and becoming an add-on to the primary agency. The same way you connect to your server from home, outsourcing companies can from their offices. All the information stays on the primary company's server and can be monitored daily by managers. Should the primary company decide to end the relationship, it can change its password to maintain exclusive control and access to the system. Outsourcing can be a powerful tool for improving efficiencies and costs, but the insurer should always keep control of the keys to the information and system security.

3. Communications are critical
There are key elements to assure effective communications between the service provider and the home office. Go with an industry specialist rather than a generalist. Choose a service provider that understands the operational challenges and objectives specific to the type of insurance agency.

Make sure the service provider has its corporate head office or at least a fully functional branch office in the United States. If the main company ever needs to troubleshoot issues, or quickly implement new tasks and procedures, it'll need local support that understands its needs and can act with the speed, efficiency and responsiveness it requires.

Check the quality of the service provider's staff. The staff needs to work with the employees of the service provider daily. It is important that those employees approach their tasks with diligence and intelligence, and can communicate responsively and professionally with the home office staff. Always check the education level of the provider's staff, as well as their professional and English proficiency. Reducing errors and omissions from levels current in the organization is definitely possible, but depends on the quality, education and training of the service provider's employees.

4. Ease of implementation
Some outsourcing solutions can involve substantial investment in new information technology systems, processes and training. It often depends on how the service provider connects to the main office and whether the solution requires it to migrate to another system or continue to use its own system. Often, the most painless and effective outsourcing solutions do not require changing systems or processes, meaning that the learning curve takes place within the service provider, not among the main company staff. Find out the typical length of time to implement outsourcing solutions, compare costs between solution providers and ask for references to learn about other client experiences.

5. Winning internal support
The support and buy-in of the company's existing staff is critical to outsourcing. Employees need to understand the objectives behind the outsourcing project: that it is designed to enhance their positions, make their work more interesting by stripping out the routine, monotonous and low-value tasks, and consequently raise their productivity and impact within the organization.

Management needs to provide clear direction, be responsive to questions and concerns and reassure staff that outsourcing is designed for their benefit as well as for the agency.

6. Due diligence for proof of concept
Outsourcing can provide powerful operational and cost efficiencies, but what is the track record of the service provider? The first place to start is with its existing client base to find out the concerns, challenges and solutions they went through. Find out whether there has been a net improvement to top and bottom lines since the service was provided.

Trial periods are an excellent way to develop comfort with the way the service provider operates, the quality and professionalism of its staff, its efficiency, processing turnaround times, error rates and customer service levels.

7. Economics
The economics have to make sense. Offshore solutions offer the best returns on investment -- as long as quality control can be maintained. Examine current fully loaded costs of doing the work in-house, including salary, benefits, hiring, training, management supervision and attrition. Compare the costs to the service provider's solution.

Besides purely financial gains, there may be intangible yet significant benefits to outsourcing, such as the greater ease of adding capacity to an operation by documenting workflows, and by placing the burden for hiring, management and quality control on the service provider. By following those seven principles, agency owners and managers can generate substantially greater confidence about pursuing outsourcing as a means of making their agencies more efficient, more competitive and more profitable.

About ReSource Pro, LLC

Headquartered in New York City with its data processing center in Qingdao, China, ReSource Pro provides fast, accurate and reliable back office processing for program managers, managing general agents and brokers and agents. By performing routine processing tasks, the company helps its clients reduce their operating expenses and focus their production and underwriting staff on higher value areas of their work, such as new accounts and renewals. Founded in 2003, the company insurance processing services include data entry, underwriting assistance, policy handling, report management and special projects.