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Financial Analytics: Science and Experience
 

Outsourcing as part of the insurance company's operations: Opportunities and risks

Vol. 9, Iss. 36, SEPTEMBER 2016

PDF  Article PDF Version

Received: 26 August 2016

Received in revised form: 7 September 2016

Accepted: 19 September 2016

Available online: 29 September 2016

Subject Heading: RELIABILITY OF FINANCIAL INSTITUTIONS

JEL Classification: G22

Pages: 55-66

Gukova A.V. Volgograd State University, Volgograd, Russian Federation
avgukova@mail.ru

Shor I.M. Volgograd State University, Volgograd, Russian Federation
shordima@yandex.ru

Shor D.M. Volgograd State University, Volgograd, Russian Federation
shordima@yandex.ru

Importance It is very important to enhance the efficiency of financial result management, thus strengthening financial sustainability and competitiveness of the insurance company. High financial results significantly depend on the efficacy of tools used. Outsourcing represents one of the tools that optimize expenses, mitigate risks and increase revenue of the insurance company. The article examines opportunities and risks of outsourcing as a contemporary and promising method to reinforce financial results within the insurance company's operations.
Objectives The research comprehensively examines outsourcing opportunities and risks in the insurance company’s operations and forges a scientific approach to reasonable decision-making on the use of outsourcing in insurance.
Methods We applied a dialectical method of research that was practiced through general scientific methods and techniques, with the prevalence of observation, comparison, logic analysis and synthesis, summary of theoretical and practical material.
Results We specified the opportunities and risks, promising areas and algorithm for decision-making on outsourcing as a modern and effective method to strengthen financial results in the insurance company’s operations.
Conclusions and Relevance We conclude that outsourcing requires the insurance company to determine its strategy and formulate policies for contracting a process/function out, outline the risk management system for outsourcing purposes, implement a cost-effective approach to selecting the outsourcer and preparing an outsourcing contract, elaborate and approve a contingency road map, undertake confidential data protection measures. The decision-making process shall be based on such fundamental phases as testing of the process/function in terms of selection criteria approved by the insurance company, assessment and evaluation of the delegated process/function.

Keywords: insurance company, financial results, outsourcing, opportunities, risks

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