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Health Insurance (prudential standard) determination No. 4 of 2015

Prudential Standard HPS 231 Outsourcing

Private Health Insurance (Prudential Supervision) Act 2015

I, Ian Laughlin, delegate of APRA under subsection 92(1) of the Private Health Insurance (Prudential Supervision) Act 2015 DETERMINE Prudential Standard HPS 231 Outsourcing in the form set out in the Schedule, which applies to all private health insurers.

This instrument takes effect on the day the Private Health Insurance (Prudential Supervision) Act 2015 commences.

Dated: 26 June 2015

[Signed]

Ian Laughlin
Deputy Chairman

Interpretation
In this Determination:

APRA means the Australian Prudential Regulation Authority.

Private health insurer has the meaning given in the section 4 of the Act.

Schedule

Prudential Standard HPS 231 Outsourcing comprises the 7 pages commencing on the following page.

Prudential Standard HPS 231

Outsourcing
Objectives and key requirements of this Prudential Standard

This Prudential Standard sets out minimum requirements for outsourcing of a private health insurer's business activities.

The key requirements of this Prudential Standard are that:

     * a private health insurer must have an outsourcing policy approved by the board of the insurer;
     * a private health insurer must consider a number of factors when assessing options to outsource a material business activity to a third party outside of the insurer's corporate group;

     * a private health insurer must, for each material business activity that is subject to an outsourcing arrangement conduct a risk assessment, develop and implement risk controls that address any risks identified and regularly report to the board on the status of the risks;

     * a private health insurer must monitor its outsourcing arrangements;

     * a private health insurer must include a requirement that the outsourced service provider allow APRA access to documentation and information related to the outsourcing arrangement with the private health insurer; and

     * a private health insurer must meet certain notification requirements.

Authority
     1. This Prudential Standard is made under subsection 92(1) of the Private Health Insurance (Prudential Supervision) Act 2015 (the Act).

Application
    2.             This Prudential Standard applies to all private health insurers[1], except where expressly noted otherwise.

    3.             All private health insurers have to comply with this Prudential Standard in its entirety, unless otherwise expressly indicated.

    4.             This Prudential Standard takes effect on the day the Private Health Insurance (Prudential Supervision) Act 2015 commences.

Interpretation
    5.             Terms that are defined in Prudential Standard HPS 001 Definitions appear in bold the first time they are used in this Prudential Standard.

    6.             Where this Prudential Standard 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