Why insurers and brokers need smarter resourcing resilience strategies

Outsourcing has long been a cornerstone for insurers, brokers, and MGAs seeking to manage costs, enhance efficiency, and scale operations. External service providers have played a pivotal role, offering access to skilled professionals for tasks such as claims administration, policy servicing, and underwriting support.

However, the landscape is evolving. Amid talent shortages, rapid technological advancements, and geopolitical uncertainties, traditional outsourcing arrangements are facing new challenges. This shift underscores the importance of due diligence, diversification, and smarter partnership strategies.

The convergence of pressures

The insurance sector is grappling with a competitive talent market, with skilled underwriters, claims handlers, and compliance professionals in short supply. Concurrently, automation and AI are transforming workflows, and regulatory scrutiny around operational resilience has intensified, particularly in the UK, EU, and US.

Geopolitical volatility, trade tensions, inflationary pressures, and shifting labour-market dynamics further complicate the outsourcing landscape. These pressures often reveal weaknesses in how outsourcing partnerships have been designed and managed, rather than flaws in outsourcing itself.

Where models come under strain

Some arrangements are more vulnerable than others. For instance, firms relying heavily on a single provider for large-scale policy administration could encounter service interruptions during demand surges if the partner lacks sufficient specialist knowledge or systems integration. These scenarios highlight the importance of governance, diversification, and cultural alignment. Outsourcing should not be a ‘set-and-forget’ exercise; when approached purely transactionally, focusing solely on cost savings without oversight, the risks of service degradation and resilience gaps increase.

Boards and regulators alike recognize that outsourcing is integral to the customer journey and directly impacts brand reputation and compliance. Consequently, strategies are now evaluated not just in terms of efficiency but also in terms of continuity, quality, and expertise. The conversation is shifting from “How cheaply can we deliver this function?” to “How resilient, flexible, and value-adding is this model?”

Access to highly skilled insurance professionals with deep market and regulatory knowledge is critical. Experienced practitioners who can integrate seamlessly into existing teams provide insurers and brokers with both scalability and assurance. This capability allows firms to design flexible hybrid models, balancing different delivery channels while maintaining quality and resilience.

Smarter, more resilient partnerships

The future of outsourcing in complex and highly regulated sectors such as insurance centres on creating smarter partnerships. This means:

• Diversification: spreading delivery across multiple providers and regions to avoid over-reliance on any single source.
•  Integration: embedding outsourced teams into internal processes and systems to avoid silos.
•  Expertise: partnering with firms that bring deep insurance knowledge, not just administrative capacity.
•  Technology enablement: leveraging outsourcing to embed automation, enhance data quality, and free specialists to focus on higher-value work.

When approached this way, outsourcing evolves from a cost-saving tactic into a strategic enabler of resilience, allowing insurers, brokers, and MGAs to navigate disruption with confidence.

Building operational resilience into the operating model

For global insurance businesses, the key is to view outsourcing within the wider framework of operational resilience. The UK FCA’s approach emphasizes that effective operational resilience is about accepting that disruptions will happen but working to minimise the impact when they do occur. Operational resilience is focused on responding and recovering in ways that protect consumers and markets. The FCA emphasises that firms should prepare for severe scenarios in advance, adapt their communication plans under pressure, and embed resilience into their culture. These principles are essential for firms to strengthen their resilience culture by learning from incidents and ongoing scenario testing to remediate any newly discovered vulnerabilities.

A new balance

Outsourcing will remain a cornerstone of insurance operations, but the balance is shifting. Insurance is, at its core, about preparing for the unexpected: a reminder that resilience, flexibility, and expertise must be at the centre of every strategy.