I’m preparing an interview that I’ll be posting next week to Sourcingmag.com, and an interesting topic came up in the course of the discussion, which took place between Karen Watterson, one of our editorial contributors, and Tom Hynd, an advisor for outsourcing consultancy TPI. The interview took place in February 2005.
I thought I’d share it, because I think it’s an intriguing idea…
Karen:
Do most financial services firms buy insurance to mitigate the risk [of outsourcing]? Or is that too expensive?Tom:
No, actually… that’s a better question than you think. It so happens that I am speaking at a seminar next week where insurance companies are just now starting to think about offering explicit insurance to corporations covering outsourcing, particularly offshore outsourcing. And up until now…Karen:
What’s good for the goose isn’t good for the gander…Tom:
Yeah. Most corporations consider their current coverage to cover these areas. They’ve never delved into the murky world of corporate insurance. There’s constant… what I’ll call tension between corporations on the buy side of insurance and on the sell side to what’s actually included in their contracts. So most of what I’ve seen is the insurance people saying, “No matter what we do, make sure things are covered in the contract, the actual agreement — but that existing policies remain enforced.” They tend to resist insurance industry efforts to add on explicit additional policies covering areas. It will be interesting to see how this latest development will work out.Karen:
I’ll bet that’s one of the pain points that people don’t even want to think about.Tom:
Yes. But most insurance executives that I’ve dealt with say, “It’s covered under our existing policy,” and they’ll argue with the insurance providers that it is.I’m going to learn more about this in coming weeks to share here. In the meantime, if you have any experience with insurance that explicitly covers an outsourcing engagement, I’d like to hear from you: [email protected].
