The Insurance Commission (IC) on Wednesday issued its guidelines on the outsourcing activities of insurance companies which specifies business areas that may be done in-house and those that can be outsourced to third parties.
Insurance companies can benefit from the potential of BPO to allow them to focus more on their core competencies
IC Commissioner Dennis Funa said the new regulation is a recognition of the benefits that can be gained by both insurers and reinsurers in outsourcing their business processes.
“We recognize that insurance companies can benefit from outsourcing their business processes such as improved productivity of existing operational capacity and trimmed down overall capital expenditures,” Funa said.
“Insurance companies can benefit from the potential of BPO (business processing outsourcing) to allow them to focus more on their core competencies, placing the burden of other non-core activities on the BPO providers, thereby improving the efficiency of the in-house staff,” he added.
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The IC chief likewise said the regulations aim to guarantee insurer compliance to the general guidelines and effectively balance the interests of protecting the insurance public as well as develop and strengthen the insurance industry.
According to the IC, the guidelines outlined in the regulation will ensure due diligence among insurance companies as well as an effective oversight over any and all outsourced activities.
“Insurers shall be ultimately responsible to their policyholders for any and all outsourced activities and for ensuring that the outsourced activities are conducted in a safe and sound manner and in compliance with applicable laws, rules and regulations,” the IC said.
“Insurance providers are also required to continuously monitor the BPO provider in the performance of the outsourced activities and are expected to ensure continuity of business operations if the outsourced BPO provider cannot perform the outsourced activities,” it added.
The new regulations inhibit insurers from outsourcing functions that are directly related to doing or transacting insurance business in addition to the prohibition of outsourcing solicitation activities as defined in the new guidelines.
Funa said he expects prompt insurer compliance.
“We expect insurers to take into account the general guidelines set forth in the new regulation in formulating and monitoring their outsourcing arrangements for the protection of the interests of their existing and potential policyholders,” he said.
