Outsourcing Best Practices – Four Considerations for the Life Insurance Industry

June 1, 2021 at 11:00 AM / by Ibhaze Uduehi  /  3 minute read

Outsourcing

“Outsourcing is defined as delegating to a service provider, over a defined period, the performance and management of a function, activity or process, that is or could be undertaken internally by the Insurer or the Intermediary itself.” – ccir-ccrra.

Although outsourcing tends to be initiated as a solution to a gap in workflow, it must not hinder the quality or timeliness of the Insurer’s or Intermediary’s output outlined in their contracts:

“CCIR and CISRO expect that functions related to conduct of insurance business outsourced to service providers do not hinder the quality of services or jeopardize the Insurer’s or the Intermediary’s ability to achieve fair treatment of Customers.” ccir-ccrra

There are several reasons behind any organization’s decision to outsource responsibilities. They include the following:

  • Executing at a reduced cost
  • Gaining access to specialized skills that are either lacking or being fully utilized in an organization
  • Freeing up time for concentrating on strategy versus operation

That is all great. But—how to begin the outsourcing process? Much thought and planning are required to commence and implement farming out responsibilities to external parties successfully. Here is an adaptable guideline:

Set a goal – An excellent place to start is with a clear purpose or objective. Then, determine how outsourcing tasks can help achieve it. From there, create conditions that must be met before the goal can be achieved. The list could include the required skills, the number of people needed, how they will be recruited (through freelancers or an agency), the duration of the agreement with the external parties, the cost, and so forth.

Conduct research – Seek expert advice from professional networks. Get their input on the project requiring external help and the needed skillsets. Advice you receive at this point will provide more clarity on the previously outlined criteria.

Make a choice – Faced with a selection of vendors that meet your criteria? Awesome! With the data from your research, selecting an option should be easy. An ethical negotiation should keep the customer’s best interests in mind. This will happen at the intersection of good service for the client at a favorable cost to the vendor.

Proceed to execute – Drive this with clear, prompt communication on responsibilities, expectations, deadlines, and payment. Ensure that the vendors are ethical and their principles align with the company’s values concerning the fair treatment of consumers. Remember that the full responsibility of vendors’ ethics and their work lies with the party that engages them.

Subscribe to the blog to stay updated as we dive deeper into the Fair Treatment of Customers guidelines’ requirements.

Topics: Life Insurance Business as Usual

Ibhaze Uduehi

Written by Ibhaze Uduehi

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