In the 20-plus years we’ve been providing insurance license management services I’ve fielded questions like these repeatedly – from executives at start-ups and established agencies:
There are no right or wrong answers to these questions. There are benefits and challenges to both in-house and outsourced approaches.
We recently addressed how we go about recommending one or the other in, Insurance Licensing: Choosing Between In-house and Outsourced Solutions. In this guide, we’ll focus specifically on outsourcing, providing 5 specific benefits that accrue to agencies that choose this path.
Before we dive in, a bit of transparency: we provide insurance license management services to many agencies. In fact, if we were an agency, we’d be one of the 5-largest in the US, by number of NPNs under management. We also offer one the fastest growing insurance license management software solutions.
We mention this mostly because it’s the right thing to do, but also to demonstrate our credentials, and establish that we don’t have a bias towards either approach.
As a leading provider of license management services, we have a front row seat to agency managements’ thought processes for considering outsourcing. We’ll distill that down for you to the following:
Two other challenges may also come into play when considering outsourcing. Sometimes executives reach out to us after they’ve uncovered a meaningful deficiency in their licensing operation, or after the retirement or departure of a key individual.
These are not frequent occurrences. But we are occasionally brought in on a temporary basis to fix problems or fill talent gaps. In those instances, it’s not uncommon for agency management to conclude outsourcing is a better arrangement for them.
That said, regardless of an agency’s lifecycle or size, the bulleted challenges listed above generally apply equally and universally. Many insurance executives assume that only start-ups and smaller agencies outsource, but in our experience that’s simply not the case. New and smaller shops may be more likely to outsource than larger ones, but plenty of large, mature agencies choose to outsource rather than grapple with the challenges of managing licensing in-house.
By outsourcing insurance agency license management, businesses avoid many of the challenges that come with building and maintaining an in-house licensing function. Here again, we’ll distill executives’ post-decision findings to the following benefits:
Rather than building an in-house licensing operation, agencies can focus attention and resources on customer-facing activities, such as sales, marketing, and service. Creating a customer-centric culture can be extremely powerful.
Leading service providers stay up to date on state and federal regulations, ensuring agencies remain compliant without the need for building and maintaining in-house expertise. Agencies that outsource are consciously choosing not to invest in making licensing expertise a core competency.
Leading service providers stay on top of deadlines and filing requirements and should cover any fines or penalties incurred as a direct result of them dropping the ball. There is no similar backstop for in-house teams.
Outsourcing is often less expensive than the salaries, benefits, hardware, software and related expenses associated with employees. Agency executives are frequently surprised by the results of their own costs analyses.
Outsourcing license management streamlines internal operations, creating a leaner, more efficient agency.
These are powerful benefits. But let us be clear about one thing: you can outsource license management. You cannot outsource Compliance.
From owners and DRLPs, to producers and administrative staff, every agency employee is responsible for operating in compliance with the codes, rules, regulations, and laws of each state in which the agency conducts business. Licensing does not need to be a core competency of an insurance agency – but compliance does.
Growing insurance agencies need access to a range of services beyond licensing. Compliance expertise, legal and tax services, and business formation and maintenance services are part and parcel of running a business in a highly regulated industry. Accessing these services through separate law, accounting and business filing service providers can be expensive and time consuming and often leads to suboptimal outcomes. It’s a much better approach to have a single service provider with expertise in all these fields and the ability to see the entire picture, not just their portion of it.
Alongside industry-renowned insurance license management services, 3H Compliance Group offers seamless, end-to-end, custom-tailored compliance solutions that unite compliance, licensing, legal, tax, and business filing services – and can be managed simply, with a single phone call. It’s efficient, effective, and smoother than the piecemeal approach – even for agencies that self-manage licensing in-house.
Many agencies that self-manage licensing choose to use the same software we use – Creative Compliance Hub. We built Creative Compliance Hub from the ground up with the expertise of our license management team, and the input of our ever-growing user base. Today, many clients who manage in-house with Creative Compliance Hub also come to us to expand their footprints, form new entities, help with surplus lines premium tax filings, obtain regulatory legal guidance, and more.
Managing insurance licenses is a complex, time-consuming process that requires meticulous attention to renewal deadlines, multi-state compliance requirements, and evolving regulations. Many insurance agencies struggle to keep up with these demands while focusing on their core business operations. As a result, a growing number of agencies are choosing to outsource their insurance license management to improve efficiency, reduce costs, and minimize compliance risks.
Outsourcing offers agencies significant advantages, from enhanced efficiency and cost savings to improved compliance and reduced risk. By partnering with a trusted provider like 3H Compliance Group, insurance agencies can shift their focus from administrative tasks to business growth. Investing in the insurance license management approach that’s best for your agency ensures long-term success and operational excellence.
If you’d like to consult with one of our solutions experts, please feel free to contact us. We’d be delighted to help.