Many agencies are seeing their profit margins squeezed by the current soft market. And according to a recent Property-Casualty forecast by Conning Research & Consulting, the market is showing no signs of turning. This forecast predicted continued softening, increasing competition and accelerating price competition in most lines through 2007– despite the 2005 hurricane activity that mitigated price competition in severe windstorm exposed areas.

New competition is jumping into many commercial markets to try to gain market share, often under-pricing business to meet short-term premium goals. This resulting decline in rates can put pressure on an agency's margins, your revenue and profitability. To maintain profitability, agencies must write more new business or cut expenses.

When you look to cut, you may look at your marketing budget. But trimming the marketing budget can be counterproductive when you need to write more businesses just to maintain the same revenues.

You may look at technology. Automating more of your processes can reduce expenses in long-term. But automation will take a major upfront investment that can be difficult to swallow in the current market.

You may look at staffing, but how can you cut staff when you're trying to increase volume?

Let's examine staffing more closely, starting with your producers. You need your producers to write more business, but their inevitable focus on processing tasks will be an increasing distraction – entering new business applications into a system, reviewing the completeness of submissions, rating and evaluating risk, providing quotes, billing and more. They may be so bogged down with repetitive tasks that they cannot put the time they need into sales and retention.

Filling administrative positions to fulfill processing requirements can be costly and difficult, especially in some markets. This was the dilemna faced by Paul Hanson Partners (PHP), a Napa, California agency that specializes in insurance for the transportation industry. PHP has grown between 18 and 25 percent for the last five years and this growth created a considerable backlog of work, necessitating overtime and putting staff at risk for burn-out. But finding additional staff was not easy.

"Napa isn't a major metropolitan area," says Lisa Paul, PHP president and CEO. "Good people are hard to find. The challenges associated with managing, recruiting and training, in addition to implementing and expanding our programs are all significant hurdles."

PHP turned to remote staffing, an effective, low-cost solution to staffing and productivity issues. Remote staffing frees up producers and underwriters and relieves the processing bottleneck, thereby improving productivity and lifting sales. It also lifts operating margins – the cost of the remote processing staff is only 40 to 60 percent of the cost of agency staff, representing net gains for the agency.

How does remote staffing work?

At ReSource Pro, our remote staff is located at our data processing center in Qingdao, China, a modern city with a well-educated, but low-cost labor pool. When we sign up a new agency, our staff travels to meet with them and learn their systems. So this is not traditional outsourcing. We become their remote staff, adapting to existing workflows, systems and procedures. This process requires virtually no upfront costs to get started and affords a huge level of comfort to organizations that are already stretched thin.

Each Chinese team is paired with only one client, so they can become an expert in that client's systems and procedures. This also enhances confidentiality and security. Plus, data never leaves a client system. We're connected remotely to the client system and working within their system. There is nothing on any hard drive in China.

Clearly, remote staffing is a solution to the margin pressures of a soft market. But it is also a long-term solution that lowers your expense base, improves productivity and returns producers and underwriters to the high-value work of new business development and real-time customer service.