UK & Europe
A massive failure of cloud services and standard programs at just one of the large providers can trigger a chain reaction for insurance companies and other financial service providers, which in the worst case could destabilize our financial system.
In order to better counter such risks, the supervisory authorities need a cross-sector overview of where and to which external service providers functions are outsourced. Therefore, they now want to collect precise data on all primary and subordinate outsourcing via a central recording system. This will also expand the content of the already existing reporting obligations for insurers.
The data submitted by the companies is sorted and collected in a database and evaluated on a regular basis. In the future, the evaluation will be carried out in the form of outsourcing maps, which show the concentration risks and in particular the level at which they arise.
At first glance, not too much seems to change for insurance companies. Naturally, there will initially be an extended effort when outsourcing that has already been reported has to be re-reported.
However, taking a closer look at the provisions of the new German regulation (Versicherungs-Ausgliederungsanzeigenverordnung / VersAusgl-AnzV), it becomes clear that the reporting obligation will be significantly expanded and that every detail of a possible outsourcing must be recorded and kept up to date. Affected companies must therefore prepare for additional organizational efforts.
More details on the extended reporting requirements can be found in our Quarterly Update Insurance & Reinsurance 01/2022 here (German only).
The changes regarding the reporting obligation are determined and implemented by corresponding regulations – e.g., for insurers the VersAusgl-AnzV is decisive. Currently, the corresponding regulation for the banking sector is being examined by the German Bundesbank. Although the VersAusgl-AnzV does not depend on Bundesbank, BaFin is currently still awaiting the review by the German Federal Bank, as the reporting and publication platform is not to be activated until all regulations for all sectors enter into force.
BaFin expects the VersAusgl-AnzV to enter into force in autumn 2022.