IC tightens rules on outsourcing
Insurance Commissioner Dennis Funa said the newly issued guidelines on outsourcing activities now clearly define the areas of business that should be done in-house and those that could be outsourced to third parties.
File
IC tightens rules on outsourcing
Lawrence Agcaoili (The Philippine Star) - February 3, 2019 - 12:00am

MANILA, Philippines — The Insurance Commission (IC) has banned insurance providers from outsourcing functions or business processes that are directly related to doing or transacting business to protect the public.

Insurance Commissioner Dennis Funa said the newly issued guidelines on outsourcing activities now clearly define the areas of business that should be done in-house and those that could be outsourced to third parties.

He said the new regulations would help insurance companies balance the interests of protecting the insurance public on one hand and to develop and strengthen the insurance industry on the other.

Insurance companies are also now not allowed to outsource solicitation activities as defined in the new guidelines except to the extent allowed under the telemarketing guidelines issued by the Insurance Commission, and loss adjustment.

The decision on whether or not to underwrite risks and whether or not to approve or reject an insurance or reinsurance claim can not be outsourced.

Funa said the regulation would ensure that insurance companies exercise adequate due diligence and effective oversight over any and all outsourced activities.

“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.

Under the guidelines, insurers are 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.

Insurance 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 outsourced BPO provider can not perform the outsourced activities.

The same guidelines apply to reinsurance companies authorized to do business in the Philippines.

“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.

In today’s volatile and highly complex business environment, substantial changes are being witnessed in the insurance sector.

Leveraging the potential of BPO can be a valuable option that can stimulate and facilitate productivity and growth of the insurance industry.

“Insurance 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,” the IC chief said.

INSURANCE COMMISSION RULES ON OUTSOURCING
Philstar
  • Latest
  • Trending
Latest
Are you sure you want to log out?
X
Login

Philstar.com is one of the most vibrant, opinionated, discerning communities of readers on cyberspace. With your meaningful insights, help shape the stories that can shape the country. Sign up now!

FORGOT PASSWORD?
SIGN IN
or sign in with