Document ID: chunk:federal_register_of_legislation:F2015L01048:body:0:p2
Version: federal_register_of_legislation:F2015L01048
Segment Type: other
Provision Reference: 
Character Range: 2946–6210

provides for APRA to exercise a power or discretion, the power or discretion is to be exercised in writing.

    7.             Unless otherwise indicated, the term health benefits fund will be used to refer to a health benefits fund of a private health insurer, as relevant.

Outsourcing policy
    8.             A private health insurer must have an outsourcing policy.

    9.             The private health insurer's outsourcing policy must:

       (a)          be approved by the board of the private health insurer; and

       (b)          require the private health insurer, when assessing options to outsource a material activity to a third party outside of the private health insurer's corporate group, to do the things mentioned in paragraph 10; and

       (c)          require the private health insurer, when assessing options to outsource a material activity to an entity within the private health insurer's corporate group, to do the things mentioned in paragraph 11.

    10.         When assessing options to outsource a material business activity to a third party outside of the private health insurer's corporate group, the private health insurer must:

       (a)          prepare a business case, for the purpose of allowing the private health insurer to make an informed decision on the merits of any new, or renegotiated, outsourcing arrangement[2]; and

       (b)          undertake a tender process or other selection process for service providers; and

       (c)          undertake a due diligence review of the chosen provider; and

       (d)          involve the board, relevant board committee or officer of the private health insurer with delegated authority from the board, in the decision; and

       (e)          develop appropriate monitoring and renewal processes, including criteria for service levels; and

       (f)           establish dispute resolution procedures; and

       (g)          develop contingency planning, to address a situation in which the outsourced service provider is unable to continue to provide the service; and

       (h)          ensure that the terms of the outsourcing arrangement are set out, in writing, in a legally binding agreement.

    11.         When assessing options to outsource a material activity to an entity within the private health insurer's corporate group, the private health insurer must consider:

       (a)          the ability of the outsourced service provider to undertake the activity cost effectively and on an ongoing basis; and

       (b)          any changes in the risk profile of the private health insurer that arise from outsourcing the activity within the group and how the changes will be addressed within the private health insurer's existing risk management framework; and

       (c)          the monitoring procedures required to ensure that the outsourced service provider is performing effectively; and

       (d)          how any ineffective or inadequate performance by the outsourced service provider would be addressed.

Outsourcing arrangement

    12.         In this Prudential Standard, outsourcing arrangement means an arrangement between a private health insurer and another party (the outsourced service provider), including an