Meeting today's consumer demands and changing technologies isn't easy. Requests for data, analysis, processing, and management are continually increasing and most insurers don't have the internal capacity to keep pace. After all, you're an insurance company, not a technology firm.
Alliances and partnerships is hardly a new concept, but it is becoming a more crucial strategy as changes come faster and bigger than ever before. Back in 1992,
Go back even further in history and the strategic concept of partnerships exists as well. In the ancient Chinese text on tactics, The Art of War, by Sun Tzu, it states that "if you do not seek out allies and helpers, then you will be isolated and weak."
Partnerships are a strategic tactic for success. Demands to innovate, streamline, and deploy solutions that will address business needs are growing exponentially. Without the right partner, your only alternative is to continually increase your number of employees and create entire layers of personnel to try to keep pace and compete thereby creating additional cost layers that can negatively impact competitiveness and profitability.
But you don't have to go it alone. That's why many insurers turn to partnerships. “The term collaboration and partnership, those can be two different things, but how do you use them to redefine the organization?" said Novarica's Karlyn Carnahan. “What is your core competency and then how do you determine how you collaborate and partner with the right organizations, because that may help you become more agile, to get from where we are today to where we need to be in the future.”
One other important point is that "outsourcing" is not synonymous with off-shoring. The terms do stir up a lot of emotion and need to be fully understood. According to Outsourceronline.com, "In short, outsourcing is when one company gets another company (or person) to help them with a particular task from another location. Offshoring is similar to that except that the company being hired to work is overseas, in another country. Offshoring is a TYPE Of outsourcing, which is how they are connected, but they are, in fact, not the same thing." For example, Innovation Group provides business process services for P&C claims from FNOL through repair, salvage and subrogation in the United States. Those services are provided onshore through our operation in Illinois and our national repair and contractor networks.
Gartner further defines business process outsourcing or business process services as a company delegating part or all of a business process to a third party and that third party is responsible for not only systems but for processing as defined by specific criteria and metrics. They further segment into more specific categories by Process Domain (horizontal or vertical) and Service Delivery Models not to mention the role partners play in consulting with customers.
So why partner rather than go it alone. For one, there is the ability to get instant expertise and resources rather than finding and hiring experts and building your own team to work on creating a system from scratch. You're an insurer, not a solution provider. Why would you want to expend resources, both people and money, to develop capabilities that can be acquired through a partner? Wouldn't you rather put your resources toward more strategic initiatives and have a partner deliver the service capabilities you need with better results?
An essential benefit is from the insights of your partner. New perspectives, innovative approaches, and broader experiences can provide your company with innovation and new concepts that may never have come about working within your organization. If you are entrenched in your processes and methodologies, a fresh set of eyes can expose new opportunities. In addition, there's the time factor. Contrary to how many of us work, there are still only 24 hours in a day and we can only accomplish so much. Bringing in a partner with the knowledge to get things done faster and more efficiently without adding to current activities can move things into production faster.
Other reasons for partnerships vary based on viewpoint. From a technological perspective, Carnahan points out, a number of benefits including access to better methodologies, tools and best practices; access to rare and diminishing skill sets; standardized design and architecture, and management of rapid system changes.
The business side gains major benefits as well. The company can once again focus on core business competencies while improving quality and reliability of business services; improve reliability of critical information systems; improve speed of response to business changes – time to market; reduce errors; and comply with regulatory changes. It also makes you more competitive!
And of course, it all comes down to money. Partnerships, as she showed, reduce, defer, and control costs while freeing up and redirecting funds for business critical initiatives. You also gain visibility and predictability for costs. "Remember, you don’t outsource to make a service disappear; you outsource to reduce your cost structure and keep your internal resources focused on your business," David Ehrenberg wrote in
Another important area is partnering for supply chain management. Carnahan showed that one-third of insurers manage their supply chain manually and only 3% are using the types of techniques routinely found outside of the insurance industry. The question becomes, is your focus on issuing policies or on maintaining and certifying rosters of repair shops, glass shops, and contractors?
In the words of Winston Churchill, "If we are together nothing is impossible. If we are divided all will fail."
Denise Garth is the executive vice president of strategic marketing and industry relations, and global head of market strategy for Innovation Group North America. She can be reached for further comment or information via email at
