It is at the discretion of the outsourcing company whether an outsourcing officer is appointed. However, the outsourcing of key functions and self-defined key tasks always requires an outsourcing officer, who must be reported to BaFin.
In general, sub-delegation is possible. The conditions for sub-delegation must also be defined in written guidelines. If sub-delegation involves an important function or insurance activity, it must be approved in advance by the entire management or by the responsible manager at a minimum.
In the outsourcing contract or ‘outsourcing agreement,’ the regulatory requirements must be worded in a way that is binding and precise for both parties. The key topics here include:
Designing the content to ensure that outsourcing does not restrict the proper execution of the outsourced processes, the management and control capabilities of the management board, or the audit and control rights of BaFin (section 32 (2) (1) VAG). For example, it must be ensured that there is full access to data for the insurance company itself, its auditors, and the supervisory authority. Furthermore, the service provider’s cooperation with the supervisory authority is mandatory, including the right of access to the service provider’s premises.
Securing the required rights to information and instructions by contract.
Clearly defining the duties and responsibilities of both parties involved. (Performance specifications do not have to be defined in the framework agreement itself but can also be provided in annexes.)
The service provider’s immediate duty to communicate any developments that could lead to significant disruptions to the outsourced processes.
Sufficiently dimensioned notice periods to enable a change of provider and alternative solutions.
Extraordinary termination rights for good cause, such as termination of outsourcing at the request of BaFin.
Furthermore, the permissibility of a sub-delegation must be clarified. If so, the duties and responsibilities of the service provider must remain unaffected by the sub-delegation.