Philippines: Regulator issues outsourcing guidelines for insurers
Source: Asia Insurance Review | Mar 2019
The lnsurance Commission (IC) recently issued guidelines on outsourcing by insurance companies by defining clearly operations that should be carried out in-house and those which can be outsourced to third parties.
According to commissioner Dennis Funa the guidelines outlined in a new regulation aim to balance protecting the insured public on one hand and developing and strengthening the insurance industry on the other.
lnsurers will be ultimately responsible to their policyholders for outsourced activities and ensuring that these are conducted in a safe and sound manner and in compliance with applicable laws, rules, and regulations. lnsurance providers are also required to continuously monitor the business process outsourcing (BPO) provider in the performance of the outsourced activities and are expected to ensure continuity of business operations if the BPO provider cannot perform the outsourced activities.
The new regulation bans insurers from outsourcing functions that are directly related to insurance business. Accordingly, insurance companies are not allowed to outsource solicitation activities except to the extent allowed under telemarketing guidelines issued by the lC. ln addition, the decision on whether or not to underwrite risks and whether or not to approve or reject an insurance or reinsurance claim cannot be outsourced. The same guidelines apply to reinsurance companies operating in the Philippines.
Referring to outsourcing, Mr Funa said that the IC recognises that benefits include improved productivity and lower overall capital expenditures.
He said, “lnsurance companies can benefit from the potential of BPO 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.” A