NU Online News Service, March 4, 2004, 1:20 p.m. EST – Insurance groups are eyeing the ongoing political battle over foreign outsourcing to determine any possible impact on the industry.[@@]
The issue, which is expected to occupy a central position in the upcoming presidential contest, involves the prospect of white-collar jobs moving overseas to lower wage countries as a way for businesses to cut costs.
Legislation has already been introduced in the Senate on outsourcing, and it has become a major public crusade of CNN anchor Lou Dobbs.
David Farmer, senior vice president of international affairs with the Des Plaines, Ill.-based Property Casualty Insurers Association of America, says that PCI has no position on this issue currently but will study it carefully.
“The issue itself is one that is politically contentious,” Farmer says. “It is an issue that insurers and businesses will have to confront.”
Diann Sullivan, assistant vice president of federal taxes and trade with the American Council of Life Insurers in Washington, says that ACLI is concerned about legislation that affects how any business chooses to conduct its business.
In addition, she notes, several members of ACLI are international companies, which could face difficult issues depending on how outsourcing is defined.
Two bills are currently pending on Capitol Hill. One bill, S. 1873, would require call centers that are located overseas to disclose their location to U.S. residents who call in. The other, S. 2090, would require businesses that decide to move operations overseas to provide affected employees with at least 90 days advance notice.
But one industry representative, who asked not to be identified, says that the insurance industry has a major stake in the issue. Many insurance company back office operations, such as claims and call centers, are candidates for outsourcing, he says.
He adds that white collar jobs that pay $75,000 in the U.S. may pay only $25,000 in a country like India.
If one insurance company outsources and realizes economic gains, competitive pressures will force other insurers to follow suit, he says.