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Outsourcing Standard for Private Health Insurers – Regulation Impact Statement – Private Health Insurance Administration Council

On 9 July 2012, the Private Health Insurance Administration Council (PHIAC) made the Private Health Insurance (Insurer Obligations) Amendment Rule 2012 (No.1) to establish minimum best practice requirements for outsourcing arrangements for registered private health insurers. Outsourcing is common practice in the private health insurance industry with significant functions being performed by third parties and entities within insurers’ corporate groups.  This can create problems including posing a risk to consumers if their private health insurer enters into a risky outsourcing arrangement. The new outsourcing requirements sets out the arrangements that private health insurers will need to comply with in relation to the selection, engagement and monitoring of outsourcing and the associated risk management practices. A Regulation Impact Statement was prepared by PHIAC and has been assessed as adequate by the Office of Best Practice Regulation.