IRDA revises draft regulations for outsourcing by insurers
Published: Jan 27, 2017
By TIOLCORP News Service
NEW DELHI, JAN 27, 2017: The Insurance and Regulatory Development Authority (IRDA) has issued an Exposure Draft along with Proposed Regulations on IRDAI (Outsourcing of Activities by Indian Insures) Regulations, 2016 on 16/8/2016 seeking comments from various stakeholders. Based on the feedback received, the draft has been revised. The objective of the draft regulations is first, to ensure that insurers follow prudent practices on management of risks arising out of outsourcing with a view to prevent negative systemic impact and to protect the interests of the policyholders. Secondly, to ensure sound and responsive management practices for effective oversight, to ensure adequate due diligence with regard to outsourcing of activities by Insurers.
The expression 'Outsourcing' has been defined as the use of third party services by the Insurer to perform activities that would normally be undertaken by the Insurer, either now or in future, but does not include services which are generally not expected to carried out internally by the insurers such as Legal services, Banking Services, Courier services, medical examination, forensic analysis.
However, the draft regulations prohibits Insurer from outsourcing any of the following activities:
i. Investment and related functions
ii. Fund Management Including NAV calculations
iii. Compliance with AML and KYC
iv. Product designing, all actuarial functions and enterprise-wide risk management;
v. Decision making in Underwriting and Claims functions, excluding procedural activities related to payment of Survival Benefit claims in Life Insurance;
vi. Policyholders Grievances Redressal;
vii. Decision to appoint Insurance Agents and Intermediaries;
viii. Approving Advertisements
The draft regulations can be accessed at [Proposed_Draft_Outsourcing_Regulations]. The comments/suggestions on the proposed Regulations may be sent to IRDA by 7th February, 2017 .
