Articles
Back-Office Loss, Front-Office Gain. Brokerages that outsource repetitive tasks create opportunities to grow for their office staff.
By Leslie Hann
Outsourcing of insurance-related services to India is a growing trend. Revenues from offshore insurance business-process outsourcing services from India are expected to increase from $790 million in 2007 to about $2 billion in 2010, according to KPMG. While primary insurance carriers are the dominant customers, KPMG suggests both reinsurers and insurance intermediaries will increasingly turn to offshore outsourcing.
“The biggest advantage in India is cost, plain and simple,” says Patra co-founder and CEO John Simpson. “The other nice advantage is the 24-hour capability. You can do 24 hours here, but you pay a lot more for it. In big metro areas, it’s very costly, even if you had a person with a high school education doing it, and in India we get people with master’s degrees.”
Simpson—who previously co-founded and then sold Cyberbills, the innovative Internet bill payment company—says Patra’s customers place a great deal of importance on the fact that the company has its corporate headquarters in the U.S. “It’s critical to have a company here that is driving the whole business,” he says.
But an equally important aspect in the success of Patra’s model has been the relationships that develop between the staff in India and the agencies in the U.S. “We built our company so that everyone in India feels part of the U.S. company,” says Patra president Dan Easterlin. “It’s important to their motivation. We bring them over to meet their customers, and that is a bonding experience that drives up the level of trust.”
Heffernan agrees that the relationships improve the outsourcing experience. “They are like part of our company, but they happen to work somewhere else,” he says of the Patra employees.
Heffernan Insurance is one of about a dozen Council member firms that currently contract with Patra to issue certificates of insurance and provide other back-office services, and at least two other offshore outsourcing companies are courting insurance brokerages.
Exdion, a division of Crossdomain Solutions based in Bangalore, India, serves carriers, brokerages and third party administrators in the U.S. and U.K. “We call ourselves the back office for policy life cycle management,” says Santosh Naik, head of global sales. “We manage every process across the life cycle of a policy, though we get to manage more of those that require less interaction with the agent or broker’s customer.”
Exdion’s insurance services evolved after its finance, accounting and other back-office services began attracting insurance industry customers in 2000. To increase its appeal to middle-market and smaller brokerages, Exdion has launched several on-demand or pay-per-use services for issuing certificates and policy checking. “On-demand services make access to offshore [outsourcing] much easier for small and medium brokers,” he says.
The birth of another outsourcing firm for insurance brokerages was more serendipitous. ReSource Pro LLC was formed by Distinguished Programs Group, a New York-based MGA that specializes in real estate programs. When Kemper Insurance was disintegrating, Distinguished had to move 13,000 accounts to a new carrier within 10 weeks. When employees estimated that it would take 13 months to do the job while still getting their own work done, Distinguished turned to former employee Matthew Bruno, who had moved to China. Working with a few computers in a small office, Bruno and a small staff finished the job in the required time. “That set the lightbulbs flashing,” says ReSource Pro CEO Dan Epstein.
Distinguished asked employees for the two or three tasks that they hated most, and Bruno developed workflow procedures to transfer the work to the team in China. The average account manager, Epstein says, spends more than 50% of his or her time doing processing work that the client never sees and 20% on the phone dealing directly with client. “If we can halve the processing time and double the client facing time, what kind of impact will that have?”