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Life Health > Life Insurance

Outsourcing Bills Worry Insurers

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Insurance groups are eyeing the ongoing political battle over 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 already has been introduced in the Senate on outsourcing, and it has become a major public crusade of CNN anchor Lou Dobbs.

Diann Sullivan, assistant vice president of federal taxes and trade with the Washington-based American Council of Life Insurers, says 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 currently are 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 bill, 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 the insurance industry has a major stake in the issue. He says many insurance company back office operations, such as claims and call centers, are candidates for outsourcing.

White-collar jobs that pay $75,000 in the U.S. may pay only $25,000 in a country like India, he says. If one insurance company outsources and realizes economic gains, he says, competitive pressures will force other insurers to follow suit.

Reproduced from National Underwriter Life & Health/Financial Services Edition, March 12, 2004. Copyright 2004 by The National Underwriter Company in the serial publication. All rights reserved.Copyright in this article as an independent work may be held by the author.


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