What should you look for in an insurance outsourcing partner?

This article is a submission by Fusion Business Solution (P) Ltd.-FBSPL. Fusion Business Solution (P) Ltd. (FBSPL) is a Udaipur, India-based company providing Business Process Outsourcing, management, consulting, and IT services, with operations in New York, USA.

According to the latest market research and reports, around 70% of mid-to-large scale insurance firms have outsourced some tasks (policy checking, claims processing, claims reconciliation) of their insurance operations. The reason is simple: an increased workload and time-consuming tasks.

Even small and mid-sized agencies have begun outsourcing to stay competitive. The rising demand for outsourcing among small insurance agencies in 2025 shows just how critical this shift has become for all-scale agencies.

From adhering to rising customer expectations to compliance audits and retaining skilled staff, insurance agencies are forced to do more with less.

But here is the catch!

Outsourcing only works when it’s done right. Therein lies a critical decision – choosing a reliable insurance outsourcing service provider. And that’s precisely where most insurance agencies fall into the trap.

To help those business owners, we have prepared this blog. It highlights the significant factors to consider when choosing an insurance outsourcing partner.

Key factors to consider when choosing the right insurance outsourcing partner

The following is a list of significant factors to consider while looking for a trustworthy insurance outsourcing service provider.

Adhering to all these factors will help you land the perfect outsourcing partner you might have been aiming for years.

1. Industry-specific experience

Unlike any other industry, insurance operates differently. The workflows are quite complex, and the stakes are high, especially when dealing with compliance-heavy processes.

Choosing a generic insurance outsourcing company might offer trained staff, but they are not the right fit if they lack insurance-specific knowledge.

Things to consider:   

• How many years of experience do they have in the insurance BPO sector? 
• Are they familiar with lines of business (P&C and Employee Benefits)? 
• Do they have any past client references within the insurance domain?

2. Scalability & workflow flexibility

We all know that insurance businesses generally operate on seasonal cycles. Make sure the outsourcing partner you choose should be able to scale up or down based on business demand.

To ensure the same, consider the following.

Things to consider:

• Flexible pricing or hourly models during seasonal surges 
• Cross-trained backup teams in case of emergency 
• Ability to work in your time zone or 24*7 support 

3. Expertise in integrating insurance tools & systems

Any insurance outsourcing solutions provider you choose will likely work with your existing tech stack. If they are not well-versed in using your AMS (Agency Management System) or CRM, you will end up spending time rectifying errors, rather than saving.

In fact, many insurance agencies are optimizing their claims process and boosting retention through tech-enabled outsourcing strategies.

Things to consider: 

• Expertise in AMS platforms like Applied Epic, AMS360, HawkSoft, NowCerts 
• Must have used quoting and rating tools like EZLynx, PL Rating 
• Well-versed with task automation platforms like Zapier, RPA tools, or proprietary bots

4. Data security, compliance, and certifications

When it comes to insurance outsourcing, protecting client data is a challenge. The partner you choose will handle sensitive data daily, from Social Security numbers to financial histories.

Hence, protecting data and proven credentials should be at the top of your evaluation checklist.

Things to consider:  

• Are they ISO 27001 certified or SOC 2 Type II compliant? 
• Do they enforce secure VPN access and data encryption? 
• Are they trained in compliance standards like HIPAA or GDPR?

5. Communication & transparency

No matter how technically good your partner is, a lack of transparent communication will derail the entire outsourcing relationship. Transparency in operations and regular reporting are non-negotiable.

It will help to ensure seamless collaboration, primarily if teams are distributed regionally.

Things to consider: 

• They must provide daily status updates and weekly review calls.  
• They should have a dedicated account manager. 
• The outsourcing partner’s team members must understand insurance-specific terminologies well. 

Common mistakes businesses make when choosing an insurance outsourcing partner

Outsourcing has become a go-to-strategy for businesses looking forward to reducing operational burden, expanding their service, and improving turnaround time.

But, despite its benefits, multiple insurance business owners approach outsourcing with a different mindset. They focus more on cost and speed than quality, and that’s where they lag.

There are other common mistakes businesses make when selecting a reliable insurance outsourcing service provider.

1. Prioritizing cost over quality

80 out of 100 insurance agencies run behind cost and end up availing cheap insurance outsourcing services. Choosing the cheapest insurance outsourcing partner might seem like a smart move at first, but it often comes with compromises in quality, accuracy, and compliance.

2. Skipping SLAs and process documentation

When SLAs and workflows aren’t clearly defined, it leaves everyone guessing. This mistake could really hurt your business performance and lead to missed deadlines.

So, always choose a partner that follows a structured agreement. That will help ensure everyone is accountable and keeps things consistent.

3. Neglecting onboarding & knowledge transfer

Neglecting the onboarding and knowledge transfer step can create confusion and slow things down. You should have a solid onboarding process that helps to speed up your outsourcing process with no mistakes or errors.

These are the top 3 mistakes that the majority of insurance businesses make and end up choosing the wrong insurance outsourcing service provider. If you are still unsure if outsourcing is right for your agency, you might be falling for outdated myths.

Choose the right insurance outsourcing partner before it costs your business!

Outsourcing insurance tasks isn’t just about reducing workload but also improving your operational bottlenecks. All of this can only be possible when you choose an outsourcing partner who truly understands the insurance ecosystem.

Make sure they are well-versed with your current system’s compatibility and domain knowledge. Each of these factors plays a critical role in long-term success, so do not run behind a service provider with low cost and cheap services.  

Now, that you know ‘How to choose the right insurance outsourcing partner?’ and ‘What mistakes to avoid?’ start your hunt now!

But wait!

Before you finalize your next insurance outsourcing partner, revisit these checkpoints again and then connect with the service providers. Selecting the right partner can help your agency move faster and scale smarter. So, make a wise decision.