The title insurance industry is facing multiple changes, including new CFPB regulations and a skilled labor shortage in the United States.
In a previous article, we noted that the United States labor markets are at the starting point of a skilled labor shortage. Participants in the title insurance industry will be affected by the shortage because they use highly skilled employees at every level of their organizations: title examiners, title searchers, escrow officers, title plant staff, etc. The industry is also dealing with new CFPB regulations which require internal changes and increased spending in order to be compliant.
One solution to these changes is to outsource some activities to competent offshore providers located in areas with skilled people, capable of doing the kind of detailed and complex work that the title insurance industry requires. In order to be compliant with the new regulations and ALTA’s best practices, the offshore provider should also be certified by a recognized international certifying authority – ISO 27001, SOC/SSAE and other appropriate certifications.
Outsourcing high-liability production to offshore companies carries its own risks, including:
- The selected outsource company is not a “fit” for your company, either because they don’t have the capabilities that your company requires or because the cultures of the two companies don’t work well together.
- The upset caused within the customer organization as long term employees see outsourcing as an eventual threat to their jobs and begin looking for other opportunities. Experienced and diligent employees will find ample opportunities for their services elsewhere as labor markets tighten.
- Losing critical skills within the company, therefore becoming captive to the outsourced entity.
- Other risks: individual to specific areas or companies.
What it comes down to is that a successful outsourcing solution requires trust-building between the companies and a period of time to ensure that the chosen company has the skills and capabilities that were promised and advertised. A successful relationship with a competent outsource company will last years, perhaps decades, and could become a strategic driver for multiple corporate initiatives. It should be given the same care as any other strategic relationship.
There is a way to reduce the risk while meeting the goal of building a trust-based relationship with an outsourcing company – select products which are not key to your company’s operations, and yet provide a way to examine the culture of the outsourcing company, their competence and understanding of title insurance and how well the staffs of the two companies work together.
Long after prices are negotiated and contracts signed, the success of an outsourcing relationship will be determined by the staff that works in the trenches every day; if those staffs build trust and respect for each other, the outsourcing initiative will be a success.
HDEP International’s facilities are ISO 270001 certified, and the company has an almost 30-year history working with participants in the title insurance industry. While many clients have contracted for complex tasks right from the start, others have used products with lower liability to evaluate our competence, experience, understanding of title insurance concepts, and attention to detail. These products have included:
- Final policy typing: a task that many title agencies use as fill-in work because it is not time sensitive.
- Uninsured products: such as property reports, owner & encumbrance reports and similar.
- Abstract typing: for review by attorneys in abstract states.
- Title plant indexing: a frequent first step for outsourcing initiatives.
- Market share reports: prepared by examining specific document types.
Your company may have other products with a lower liability profile, but that still allow your staff and management to get a good idea of the culture and competence of the selected outsource company. If you have long considered an outsourcing solution, but wanted to lower the risk to your own organization as the process unfolded, please call us, and we will work with you to define a process that works for both companies.
Please, contact us to learn more.