If we accept a mature process by definition has been around longenough for most of the glitches to have been eliminated, then howmature is the practice of outsourcing in insurance?

On the technology front, while the outsourcing process probablyhasn't hit full-fledged maturity, it has made headway (for more,see "Invisible Assets" and "Inside Track: Still Simmering").Initially, the main point of going external and usually offshorewas to save money, and it largely was viewed as a tacticalsolution. It also had a bad whiff about it, so much so that Iremember when putting together a conference session on the topic acouple of years back, I couldn't find insurers willing topresent.

More recently, however, the attitude toward outsourcing slowlyis changing. Although the debate isn't cold, it has cooled. Inpart, that may be because the focus no longer is solely on costcutting. Rather, the goal also is about using outsourcingstrategically in order to give greater attention to core functionsand thereby gain competitive advantage and the opportunity forinnovation.

I stood where these roads met at the IASA conference last month.One of the sessions offered input from a research firm (Celent), avendor (Innovation First Notice), and an insurer (Unitrin KemperAuto and Home). The reasons Unitrin Kemper outsources combinedollars and sense: "We needed effective management of incurredexpenses for all aspects of the claims intake process. We wanted topromote a streamlined method of loss reporting to allow for earlyintervention and initiation of the adjusting process to mitigateloss-dollar expenditure. We also needed to obtain accurate data toassist in starting the investigation process as soon as possible.Customers want things settled quickly. They don't want to tell thesame thing to multiple people," said Robert Burke, director ofclaims technology/best practices for the insurer. Celent senioranalyst Donald Light summed up the current attitude towardoutsourcing as follows: "Unless you feel you can improveefficiencies and customer advantage, [outsourcing] is really notworth it."

At the same time, in my conversations with several technologyexecutives, their focus wasn't foremost on how to do variousinsurance IT functions, such as security or compliance, whichformerly were top of mind. Instead, I was hearing words such as"improve . . . maximize . . . be more effective." To me, this wasan indication innovation has been transformed from a purelycreative endeavor to one of delivering business value.

With the resources available and a desire for innovationapparent, the industry seems primed for real advancements, perhapsin the not-too-distant future. Naysayers may argue insurers aretied to legacy systems that are tied to legacy products. But as theclich? goes, nothing happens overnight. Yet things do happen, andin some IT shops, maybe sooner than later.