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Circular 12/04

Note: This page is a representation of information published on the PHIAC website prior to 1 July 2015. This information is provided for reference and research purposes only. 

Replaces Circular: N/A
Published Date: 02 Mar 2012

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Industry Consultation Opportunity - Proposed Outsourcing Standard for Private Health Insurers

This circular initiates the second of two planned rounds of industry and stakeholder consultation on the development of a proposed outsourcing standard for private health insurers.

The Private Health Insurance Administration Council (PHIAC) is now seeking comments from industry stakeholders in relation to the attached draft outsourcing standard (the Standard) by Friday 6 April 2012.

From the first consultation PHIAC received 15 submissions in total – 10 from insurers, and 5 from key stakeholders.

The Standard builds on the feedback and input PHIAC received. Many of these submissions comprised questions as to the functionality of the Standard and how it may be implemented in relation to existing major outsourcing arrangements such as those struck by many insurers with HAMBS and the Australian Health Services Alliance.

A second round of industry and stakeholder consultation is an important opportunity to hear further from industry and stakeholders, and PHIAC invites comment on the proposed Standard. This consultation opportunity provides stakeholders with a discussion paper, a draft Standard and an outsourcing policy guide for review and comment.

Once established, the Standard will appear as a schedule to the Private Health Insurance (Insurer Obligations) Rules 2009 (the Rules). Simply put the Standard will require insurers to:

  • implement a Board-endorsed policy that sets out its approach to outsourcing
  • ensure that the Board is able to demonstrate to PHIAC that it has identified and can manage any risk that may materially affect the prudential safety of the insurer, associated with an outsourcing arrangement
  • ensure that their outsourcing arrangements allow PHIAC to access information from the service provider, and for PHIAC to make site visits to the service provider when necessary
  • ensure that they have prior written approval from PHIAC to outsource material business activities to offshore service providers
  • ensure that they notify PHIAC of outsourcing arrangements within 28 days after the execution of related agreements,

The Standard when made will be located at Schedule 4 of the Rules, and will set out the minimum requirements that all registered private health insurers will need to comply with in managing outsourced arrangements once the Standard is endorsed.

In an effort to improve the efficiency of regulation, the Australian Government requires PHIAC to conduct a preliminary assessment in order to establish the nature and extent of compliance costs on industry. As part of the consultation process, PHIAC requests that respondents indicate the impact – financial or otherwise - the proposed Standard is likely to have on their operations.

PHIAC invites written submissions on the content and regulatory impact of the Standard, and the usefulness of the outsourcing policy guide to assist compliance. Submissions should be addressed to:

Special Adviser – Prudential Standards Private Health Insurance Administration Council PO Box 4549 KINGSTON ACT 2604

Or by email: marked ‘Outsourcing Standard’. Written submissions must be received by close of business on Friday 6 April 2012.

Submissions may be the subject of a request for access made under the Freedom of Information Act 1982 (FOI Act). Submissions will be treated as public unless clearly marked as confidential and the confidential information contained in the submission is identified. PHIAC will deal with any FOI Act requests in accordance with the provisions of the FOI Act and the PHI Act.

Contact information

Contact Officer: Josh Edwards
02 6215 7916