It has become increasingly popular for financial services institutions to outsource their business activities to other parties as a means of reducing costs and achieving strategic aims. These activities may include customer related services and back-office activities.
While outsourcing may bring cost and other benefits, such arrangement may increase an insurer's dependence on other parties and increase its risk profile. An authorised insurer is therefore expected to adopt a sound and responsive management framework in formulating and monitoring its outsourcing arrangements.
Produced by Hong Kong's Office of the Commissioner of Insurance, this guidance note sets out the essential issues that the Insurance Authority ("IA") expects an authorised insurer to take into account in formulating and monitoring its outsourcing arrangements for protecting the interests of its existing and potential policy holders.
Whilst this guidance note seeks to help authorised insurers to identify and mitigate the risks associated with outsourcing without hindering the efficiency and effectiveness of their operation, it however should not be regarded as a substitute for consultation of professional and legal advice.