Key Drivers, Strategies and Methods in Outsourcing the RunOff Lee Brandon, CEO, PRO Insurance Soluti

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Key Drivers, Strategies and Methodsin
Outsourcing the Run-OffLee Brandon, CEO, PRO
Insurance Solutions LimitedAndrew Brannon,
Director, LCL Group Limited
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Agenda

• Why consider outsourcing?
• To what extent does outsourcing provide a
  solution?
• Types of outsource
• Different stakeholder goals
• A four phase approach to outsourcing
• Summary
• Questions

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Why outsource typical goals
Reduce Cost
Focus
Reduce Risk
Improve Balance Sheet
Match Skills to Needs
Enhance Reputation
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Key business drivers

• Understanding the liabilities
• Data integrity
• Minimising liabilities
• Maximising assets
• Managing Cash flow
• Controlling costs
• Motivating staff
• Facilitating an exit
• Managing risk

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Common problems/constraints

• Retaining the knowledge and key staff
• Meeting the different demands of run-off
• Ensuring continuity of service during the
  outsource
• Fulfilling the long term objective, closure and
  improvement in balance sheet

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To what extent does outsourcing provide a
solution?

• A specialist has skills and understanding geared
  towards run-off solutions, understanding that
• run-off requires a specific focus and perspective
  to deal with the key issues
• every portfolio is obviously different and
  requires a different emphasis in terms of
  objectives
• The outsourcer should be able to
• manage the resource levels and skillsets to meet
  your specific needs
• facilitate a range of exit solutions
• access their existing network of contacts for
  your benefit
• align their interests with yours sharing in the
  upside/(downside)

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What outsourcing shouldnt be about

• Replacing like with like it should
• be proactive in seeking a solution, i.e. not
  run-on
• be more cost-effective
• manage risk
• generate value
• You abdicating responsibility
• You should still have control
• You must have a part in monitoring/managing the
  run-off

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Different stakeholder goals

• Who are the Stakeholders?
• What represents value to them?
• Can all receive value?
• Who holds the power?

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Where does the power lie?

• This weeks Top 6 count-down
• Influence over shaping the strategy and the
  format which value is delivered

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Types of outsource

• A range of options are available
• Full outsource all run-off activities
• Functional outsource specific aspects, e.g.
  credit control, accounting
• Project outsource specific objectives, e.g.
  commute with particular (re)insurer
• Outsource can involve one provider, or many
  either through a main provider or directly
• Each has a its own advantages and disadvantages

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An approach to outsourcing?
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Strategy stage

• Define What, When and Why
• Consider
• The relationships with the various stakeholders,
  including the outsourcer
• How you and the outsourcer will manage the change
• How to ensure alignment between your interests
  and the outsourcers
• The skills required for the outsource ITT and
  ongoing outsource management?
• Outsourcing requires your commitment.
• Now is the time to consider and prepare.

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Evaluation and selection

• Structure a beauty parade
• Look for specialists that match or improve on the
  skills required
• Screen
• Due diligence stage
• Be prepared to provide detailed data
• Be prepared to provide access to staff
• Be as open as you can
• The proposal
• Look for understanding and a tailored proposal
• Look for strength and depth
• Be prepared to be challenged by the outsourcer
• Assess value of service vs. cost, ability to meet
  your objectives
• Trust and transparency the tender document is a
  guide!

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Transition and transfer

• The right contract and deal
• Ensure you can measure performance against
  requirements
• Agree plans with milestones
• Flexible - a contract that can evolve over time
• Manage the transfer you and the outsourcer
• Continuity is key
• Communicate to stakeholders as early as possible
• Initially its about integrating people processes
  and technology
• Knowledge exchange

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Manage and review

• The ongoing outsource requires your management
• Consider how you will structure this internally
• Define roles and responsibilities
• Define how you appraise performance and provide
  feedback
• The outsource is still a partnership work
  with the outsourcer to achieve the business goals.

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Summary

• Run-off can be as much about managing corporate
  reputations as it is about managing discontinued
  liabilities
• In practical terms run-off managers represent
  companies in the market place
• Success comes from building a partnership founded
  on trust and transparency
• It is important to select the right partner
• Interests should be aligned
• With an outsource you still have a part to play

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For further information please contact Lee
Brandon Andrew Brannon t 44 (0)207 337
8911 t 44 (0)207 398 5600 e
lee_brandon_at_pro-ltd.co.uk e abrannon_at_lcl-group.c
om
Understanding clients, building partnerships