Modern Outsourcing: The Separation of Technology & Services

June 1, 2026 / 5 min read

Historically, insurance outsourcing has predominantly been viewed by carriers as a means to reduce costs and divest themselves of non-strategic business. This is because carriers were contractually and legally obligated to service the business they issued, they delegated the servicing of said business to a third-party administrator or business process outsourcing (TPA/BPO). Catch phrases from the TPA/BPO like "Your mess for less." and carrier quips like "Just give us the cheapest cost while keeping us out of jail.", were commonplace. As a result, the market and value propositions associated with insurance outsourcers have been aligned to drive costs down as low as possible. And, the outsourcing solutions were built and maintained to reflect that: leveraging older technology, manual workarounds, and cheaper, offshore labor. These environments were often proprietary, static, hard-coded, and complex. However, they offered stability, cost-predictability, and familiarity to the operating staff, enabling the outsourcers to gain resourcing economies of scale in a multi-tenant environment, but at the cost of innovation and growth.

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The shift: From cost reduction to revenue growth

For years, carriers have looked at their own environments and found many similarities with traditional outsourcers: antiquated, inflexible, and ill-suited for innovation and growth. These carriers are now looking at outsourcing as an alternative means to achieve growth, and as a result, the outsourcing market has changed significantly. In short, carriers are no longer considering outsourcing exclusively for non-strategic business, and their objectives are not limited to cost reduction. Today, carriers are viewing outsourcing as an extension of their own operations, where increased revenue and exceptional, even "white-glove" service, is in demand. As such, the challenge facing both outsourcers and carriers is this: How can a processing environment built around rock-bottom costs be repurposed for strategic top-line revenue growth? The answer lies inseparating technology from services.

Separating technology from services

Similar to carriers, the heart of an outsourcing operation is its policy administration platform. Whether a proprietary or licensed platform, this platform tends to be deeply embedded within the outsourcer's ecosystem, often involving decades of complex integration, redundant data, and overlapping and conflicting rules. The overwhelming majority of the IT budget goes towards "keeping the lights on" instead of meaningful innovation. Carriers and outsourcers alike are starting with a clean slate to achieve their growth and revenue goals. This clean slate represents a separation of technology from services, with the objective of achieving the best of both worlds—the optimal technology and services in a single solution. Some carriers have gone so far as to run simultaneous, parallel selection exercises to determine the best fit for each. And while this approach is designed to yield the best of both, it also creates some obvious questions around the viability of a "shotgun wedding".

Questions to consider:

Will my chosen service provider agree to work with a platform that is not proprietary to them or one with which they're not yet intimately familiar?
Will my chosen technology provider agree to permit a separate service provider to use the platform? Even when the service provider offers competing technology?
Will my service provider attempt to persuade me to use their proprietary platform instead of my technology choice?
How do I ensure there will be one hand to shake? How do I avoid finger-pointing if disputes arise between my chosen technology and service providers?

Modern outsourcing benefits

While each carrier must ultimately answer the above questions, the benefits of modern outsourcing are too big to ignore:

Direct access: Carriers must be permitted to have direct access to the platform, as well as the data within. The carrier's own ability to configure products in a "test and learn" environment, perform specific functions (e.g., suitability for registered products), and assess their own operations through access to real-time management data are critical.
Flexible division of labor: The carrier can determine which functions within the insurance value chain will be performed by which entity, including themselves. As these needs can vary according to Line of Business or distribution channel, and change over time, this flexibility is important to the carrier.
Portability: As circumstances demand, the carrier can move the business in-house or to another service-provider.
Single tenancy: The carrier's environment is their own, and managed as an extension of their own operations, with no co-mingled data. The carrier has complete control of its environment, with the autonomy to make independent decisions rather than being placed in a queue with their competitors.
Futureproofing: The FAST® software can be readily re-platformed to support modern coding as the developer tools and languages evolve. And FAST includes not only periodic (18-24 months) code changes, but also the necessary services to apply the upgrades to carriers’ environments to prevent platform obsolescence.

The path forward

The insurance industry is at an inflection point. The traditional outsourcing model—built on cost reduction and operational efficiency—is giving way to a new paradigm that prioritizes strategic growth, innovation, and competitive advantage. By separating technology from services, carriers gain the flexibility to choose best-in-class solutions for each component while maintaining control over their own destiny.

This evolution requires careful planning, clear contractual frameworks, and a willingness to challenge long-held assumptions about how outsourcing relationships should work. But for carriers ready to embrace this approach, the rewards are substantial: faster time-to-market, greater operational agility, enhanced customer experiences, and the technological foundation needed to thrive in an increasingly digital marketplace.

The definition of success is also different today. Under the old way, success meant adherence to SLAs, while under the modern definition, success is the ability to achieve business objectives with the outsourcing as an extension of the carrier.

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