The Philippines Insurance Commission has issued a set of guidelines on which areas of business re/insurance companies are permitted to outsource to third parties.
Commissioner Dennis B. Funa explained that the regulations would ensure companies effectively balance the interests of protecting the insurance public and strengthening the insurance industry.
“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,” said Funa.
The guidelines will require re/insurers to be responsible to their policyholders for all outsourced activities, and to ensure that these activities are conducted in a safe and legal manner.
Providers will also need to continuously monitor the activities of the business process outsourcing (BPO) provider and to ensure continuity of operations if the BPO cannot perform the outsourced activities.
The new regulations also ban re/insurers from outsourcing functions related directing to transacting insurance business, including decisions on whether to underwrite risks or to approve a claim.
“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,” said Funa.
“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.”
“ln today’s volatile and highly complex business environment, substantial changes are being witnessed in the insurance sector,” Funa continued. “Leveraging the potential of BPO can be a valuable option that can stimulate and facilitate productivity and growth of the insurance industry.”
