This Financial Insights report analyzes the results of a survey we fielded in partnership with SourceMedia's Insurance Networking News about insurance outsourcing practices. We asked insurance company representatives to tell us where they were using or planning to use information technology outsourcing and business process outsourcing, with specific attention to policy administration, customer care, and claims management. We asked about numbers of ITO or BPO providers, the drivers for using outsourcing, where the cost savings were going, and their concerns about outsourcing. Finally, we asked a "reality check" question that impacts insurers and outsourcing providers alike: Does the ITO or BPO provider understand the insurance business and the processes it is supporting for your firm?

"Insurance companies and outsourcing providers alike would be much better served if insurers took the time to renew or establish the business models they need to successfully compete. These business models would then drive the outsourcing tactics insurers should use as a complement to their strategy. Our survey shows that insurers are conflicted: On the one hand, they are pursuing both ITO and BPO, and on the other hand, they are concerned about unrealized expectations and about the adequacy of their outsourcing provider's knowledge of the insurance industry." ? Barry Rabkin, senior research analyst, Insurance