All the dashboards are green, our customers must be getting good outcomes. Right?
THE WHO2 GLOBAL VIEW
Insurance has outsourced for years.
Technology. Claims. FNOL. Contact centres. Policy administration. Pricing capability.
Add-ons. Data. Customer communications. Sometimes almost the entire proposition.
And there are very good reasons for doing it. Why build something that already exists? Why employ 40 people when a specialist partner has 400? Why spend two years building infrastructure when somebody can switch it on in three months?
A strong outsourced partnership can give an insurance business specialist expertise, better technology, additional capacity, speed to market and economics that would be difficult to replicate internally.
Done properly, outsourcing can be brilliant.
But we think there is a question worth asking across the market:
At what point does outsourcing capability become outsourcing your own destiny?
Because those are two very different things.
THE OLD MODEL WAS RELATIVELY SIMPLE
Find a good provider. Agree the commercials. Integrate the technology. Put your branding over the front. Establish some SLAs. Hold a quarterly review.
Job done.
Except the customer rarely sees it that way.
They don’t think:
“My insurer’s outsourced claims administrator has missed its SLA.”
They think:
“My insurer has let me down.”
The logo on the screen might belong to the brand. The technology underneath it might not. The person answering the telephone may work for somebody else. The claims decision might pass through several organisations.
But to the customer, it is still one experience.
YOURS.
AND THE REGULATORY POSITION INCREASINGLY REFLECTS THAT REALITY
The FCA is clear that firms remain responsible for managing risk created by outsourced and third-party arrangements. Regulatory responsibility does not disappear because somebody else performs the activity.
The same principle applies under Consumer Duty. Where activities such as customer support are outsourced, the firm remains responsible for ensuring that the service delivered meets the required standard and should have systems and controls capable of monitoring it.
And the direction of travel is obvious.
From 18 March 2027, new FCA requirements will introduce reporting of certain material third-party arrangements, including material arrangements that would not traditionally have been classified as outsourcing.
This isn’t a regulator saying:
“Don’t outsource.”
It is saying:
“Know what you have outsourced. Understand the dependency. And remain capable of governing it.”
That distinction matters.
SO WHAT HAS CHANGED?
We think the problem is less the outsourced model itself and more that some outsourced relationships were designed for a different era.
Historically, management information might have looked like:
Calls answered: 93%. Average handling time: 4 minutes 38 seconds. Claims acknowledged within 24 hours: 96%. System uptime: 99.8%. Complaints within SLA: 94%.
All useful.
But none necessarily tells you whether the customer received a good outcome.
A provider can hit every SLA in the contract and still deliver an experience you wouldn’t knowingly design yourself. A claim can be answered quickly and handled badly. A call can finish within target and leave the customer confused. A repair can technically meet SLA but involve three avoidable hand-offs. A technology platform can achieve 99.9% uptime while creating unnecessary abandonment at a critical point in the journey.
Operational performance and customer outcomes overlap. They are not the same thing.
That is where we think outsourced governance needs to evolve.
THE REAL QUESTION: WHAT SHOULD THE BRAND STILL OWN?
Not necessarily the technology. Not necessarily the people. Not necessarily every process.
But we’d argue there are things an insurance brand should be very uncomfortable surrendering.
1. THE CUSTOMER EXPERIENCE
A partner can deliver it. But the brand should define what good looks like.
Not simply:
“Answer 90% of calls in 30 seconds.”
More like:
Did customers understand what was happening? Were vulnerable customers identified and supported? How many customers had to contact us repeatedly? How many avoidable journeys occurred? Where did customers abandon? How long did customers spend waiting across the whole journey, not just one provider’s part of it? What caused detriment?
That is different management information.
2. THE DATA
This one may become increasingly important.
If thousands or millions of customers are interacting with a supplier’s platform every year, enormous amounts of intelligence are being created.
Journey behaviour. Claims trends. Conversion. Abandonment. Customer sentiment. Service failure. Fraud indicators. Outcome information. Cost drivers. Retention indicators.
Yet some brands still receive a PDF dashboard once a month.
That feels increasingly difficult to defend strategically.
We think the question should move from:
“What MI does the supplier provide?”
to:
“What data do we need flowing back into our business to manage this proposition properly?”
Ideally frequently. Sometimes close to real time. And in a structure the brand can analyse independently.
Because the party holding the data often has the clearest view of what is actually happening.
3. THE DEFINITION OF SUCCESS
This sounds obvious. It isn’t.
Providers naturally optimise around the measures within their contract.
If the measure is average handling time, handling time will improve. If it is settlement speed, settlement speed will improve. If it is cost per claim, cost per claim gets attention.
But those metrics can create unintended behaviour.
The brand needs to define the outcome it actually wants. Then build the commercial model, KPIs and governance around it. Otherwise we risk measuring what is easy rather than what matters.
4. THE ABILITY TO CHALLENGE
Healthy outsourcing isn’t:
Supplier reports - supplier explains - brand accepts.
There should be independent challenge.
What changed? Why? What is the customer impact? Which cohort is affected? What isn’t in the report? What would the raw data tell us? What does good look like elsewhere? What action has been agreed? Who owns it? When will we know whether it worked?
Without that level of challenge, supplier governance can quietly become supplier administration.
5. THE ABILITY TO LEAVE
Possibly the most uncomfortable test of an outsourced relationship is:
What happens if we want to change it?
Could the business move provider? Can it extract its data? Does it understand its processes? Does it own the customer journey design? Are integrations portable? Is there a credible exit plan? Could another provider replicate the service? Could part of the capability be brought internally?
Or has five years of outsourcing created such dependency that changing supplier has become operationally terrifying?
A great partnership should make you want to stay.
It shouldn’t make it impossible to leave.
SO SHOULD BRANDS BUILD EVERYTHING THEMSELVES?
Absolutely not. That would be the wrong conclusion.
Specialists exist because specialism creates value.
A technology provider investing across 50 insurance businesses may build better technology than one insurer could justify for itself. A specialist claims operation may have deeper expertise, scale and infrastructure than a broker or MGA could realistically create.
Shared platforms can dramatically reduce cost. Outsourcing can accelerate innovation.
And there is something equally dangerous about insurance businesses deciding that “owning our destiny” means recruiting hundreds of people and rebuilding commodity technology from scratch.
That isn’t strategy either.
It can just be expensive pride.
WE THINK THE BEST MODEL SITS SOMEWHERE IN THE MIDDLE.
Own the proposition. Own the standards. Own the customer journey. Own access to the data. Own the governance. Own the outcomes.
Then use brilliant partners to help deliver it.
That feels very different from simply putting your logo over somebody else’s operating model.
The supplier should be an extension of your capability. Not a replacement for your ability to think.
WHAT WE THINK A MODERN OUTSOURCED PARTNERSHIP LOOK LIKE...
Perhaps less like a supplier contract and more like a jointly managed operating model.
Clear ownership. Shared objectives. Transparent economics. Defined customer outcomes. Live or frequent data feeds. Journey-level MI. Regular benchmarking. Customer cohort analysis. Root-cause analysis. Continuous improvement. Board visibility where appropriate. Strong exit and continuity planning. And a relationship where both parties are comfortable challenging each other.
Not because the partnership is failing.
Because that’s what a good partnership looks like.
The FCA itself increasingly frames third-party risk across the full lifecycle of the relationship, and its operational resilience expectations include understanding dependencies on third parties, not simply having contracts with them.
This isn’t new regulation creating a new problem.
It is arguably regulation catching up with something commercially sensible anyway.
ONE FINAL THOUGHT.
Insurance has become incredibly interconnected.
That isn’t going backwards.
Brands will use more technology providers, data providers, claims specialists, cloud infrastructure, AI systems and external capability, not less.
The winners probably won’t be the businesses that outsource least. Nor will they necessarily be those that build the most internally.
They will be the businesses that know precisely what they should own, what somebody else can do better, and how the two are governed together.
Because outsourcing is perfectly capable of creating better businesses and better customer outcomes.
But the contract cannot own the relationship for you.
The dashboard cannot think for you.
And the supplier cannot ultimately own your customer’s experience.
Your name is above the door.
MAYBE THE QUESTION EVERY INSURANCE LEADERSHIP TEAM SHOULD ASK IS:
Have we outsourced the work, or have we slowly outsourced our ability to control what happens next?
The views expressed in this article are those of WHO2 Global Ltd and do not constitute professional advice. All content is for informational purposes only.