Guidelines to make outsourcing in Insurance well structured.

IRDAI - Regulator Insurance Regulatory and Development Authority of India, has proposed outsourcing regulations for insurance companies operating in India, under which they can take services of individuals for activities such as medical examination, investigation of claims, and recovery. As per the exposure draft, every company should put in place a comprehensive board approved the outsourcing policy. In considering or renewing an outsourcing arrangement, an insurer should subject the agency to appropriate due diligence, the regulator said in the proposed IRDAI (Outsourcing of Activities by Indian Insurers) Regulations, 2016. “The insurer shall satisfy itself that the outsourcing agency’s security policies, procedures, and controls will enable the insurer to protect confidentiality and security of policyholder information,” according to the draft.

   

The new norms have been welcomed by the industry, as it will help regularize the outsourcing. As a better structured outsourcing mechanism can be put in place adhering to these rules. “The proposed regulations are trying to give a more structured and better shape to outsourcing activities by clearly defining core and non-core activities,” Puneet Sahni, Head-Product Development, SBI General Insurance, adding that the new norms will “positively” impact business processes and customer interests.

The proposed rules will bring more accountability, as outsourcing relationships will be governed by written agreements that are legally binding for a specified period. That clearly describes all material aspects of the outsourcing arrangement, including the rights and responsibilities of all parties.