Governance, Risk and Compliance in Insurance BPO

This article is relevant to firms considering or currently engaged in insurance outsourcing across any of Felcorp's insurance service areas including:

• Insurance Outsourcing‍
• Insurance Agency Outsourcing
• ‍Insurance Back-Office Outsourcing
• Insurance Claims Outsourcing

The governance, risk and compliance framework described below applies across all engagement types.

Felcorp's Internal Governance Framework

Felcorp operates under a structured internal governance framework that covers staff conduct, data handling, operational security and service delivery standards. This framework exists to protect both Felcorp and the firms it supports, and it is enforced through internal policies that all Felcorp staff and management are bound by. For a broader overview of Felcorp's approach to security and risk, see Security and Control.

These internal policies include:

• Code of Conduct governing staff behaviour, communication standards and professional expectations
• Data Protection Policy covering data handling, storage, classification and access controls within Felcorp's environment
• Cybersecurity Policy addressing network security, endpoint protection, access management and incident response procedures
• Confidentiality and Non-Disclosure Policy applied to all staff and management from the date of employment
• Privacy Policy governing the collection, use and storage of personal information within Felcorp's systems
• Generative AI Policy restricting the use of AI tools and defining acceptable use boundaries for all staff
• Software and Tools Policy controlling what software, platforms and third-party tools staff are permitted to use
• Operations and Business Continuity Policy covering service continuity, disaster recovery and operational resilience

These policies are Felcorp's internal obligations. They govern how Felcorp manages its workforce, protects data within its own environment and delivers services. They do not extend to, replace or satisfy any compliance obligation that belongs to the firm engaging Felcorp's services. For more detail on how these policies translate into operational security controls, see Operational Processes and Policies and Security Philosophy.

What Felcorp Is Responsible For

The following responsibilities sit with Felcorp and are managed internally as part of every client engagement:

• Staff conduct and behaviour including adherence to Felcorp's Code of Conduct and professional standards policies. See Staff Compliance for how this is monitored and enforced
• Internal data protection including how data is handled, stored and accessed within Felcorp-controlled systems
• Cybersecurity within Felcorp's environment including endpoint protection, access controls, network security and incident response. See Monitoring and Reporting for how security events are detected and managed
• Confidentiality and non-disclosure enforcement across all staff assigned to client engagements. See Duty of Care for how confidentiality is maintained at the engagement level
• Staff training and competency including onboarding, technical training and ongoing skill development. See Onboarding Process for how staff are prepared before beginning live work
• Operational continuity including business continuity planning, redundancy measures and disaster recovery within Felcorp's infrastructure
• Recruitment and vetting standards including background checks, reference verification and skills assessment for all allocated staff
• Internal quality oversight including management review of staff performance, output accuracy and adherence to documented SOPs
• Policy enforcement including disciplinary action where Felcorp staff breach internal policies or fail to meet Felcorp's operational standards

What Felcorp Is Not Responsible For

The following responsibilities remain exclusively with the firm engaging Felcorp's services. Felcorp does not assume, share or absorb any of the following obligations under any circumstances.

For a full breakdown of the tasks and duties your offshore team can handle within these boundaries, see Insurance Outsourcing Scope Overview.

• Regulatory compliance including obligations imposed by any domestic or international financial services regulator, licensing body, professional standards authority or industry oversight body. See Alignment to Industry Regulations and Expectations for how Felcorp positions itself in relation to regulatory frameworks
• Licensing and registration obligations including maintaining current licences, registrations, authorisations and professional memberships required to operate in your jurisdiction
• Advice and consulting liability including all responsibility for the content, accuracy and suitability of any advice, recommendation or professional opinion prepared with Felcorp's assistance
• Client-facing compliance disclosures including all required notices, disclaimers, consent forms and disclosure documents that your firm is obligated to provide to your own clients
• Review and sign-off of deliverables including the sole responsibility to review, verify and approve all work product before it is used, sent or acted upon
• Data security within your own systems including credential management, user access controls, platform security configurations and patching within your firm's technology environment. See Client-side System Access for how access controls are managed between Felcorp and the firm
• Regulatory reporting and lodgements including all filings, returns, notifications and reporting obligations imposed by regulators or professional bodies
• Claims handling and settlement decisions including all decisions relating to the acceptance, denial, valuation or settlement of insurance claims
• Underwriting decisions including all risk assessment, pricing and acceptance decisions that require professional judgement or regulatory accountability
• Compliance training for your own staff including any mandatory continuing professional development, anti-money laundering training or regulatory awareness programs your firm is required to deliver

Why This Separation Must Be Clearly Defined

When an offshore engagement begins, there is a natural overlap in workflows. Your Felcorp staff member handles tasks, follows your SOPs and works within your systems. Over time, the boundary between what Felcorp is responsible for and what your firm is responsible for can become unclear if it is not properly documented from the outset.

This matters in practice because:

• Compliance audits do not distinguish between onshore and offshore staff. If a regulator or auditor identifies a compliance failure during an active Felcorp engagement, the question of who was responsible for the control, process or oversight that failed must be clearly answerable. Without documented boundaries, this becomes a dispute
• Data security incidents require clear attribution. If a data breach or security event occurs and Felcorp staff were operating within your systems under your access controls and SOPs, the liability for that event sits with the party responsible for the environment and controls in place at the time. Felcorp's liability is limited to failures within its own controlled environment
• Regulatory enforcement does not recognise outsourcing as a defence. Regulators hold the regulated entity accountable regardless of whether the work was performed internally, offshore or by a third party. Your firm cannot transfer regulatory risk to Felcorp through an outsourcing arrangement

For more detail on how service delivery expectations and performance boundaries are structured, see Service Level Agreements in Insurance BPO.

Firms with Developing Compliance Frameworks

Felcorp has observed a pattern where firms with sub-standard, incomplete or still-developing compliance and risk management processes engage offshore services and gradually begin relying on Felcorp to cover gaps in their own internal controls. This creates serious problems.

When a firm's compliance framework is not fully established before an offshore engagement begins, several risks emerge:

• SOPs are incomplete or undocumented, which means Felcorp staff are operating without clear written procedures and both parties are exposed if an error leads to a regulatory issue
• Quality controls and review processes are weak or informal, which shifts the de facto responsibility for accuracy onto the Felcorp staff member rather than the reviewing authority within your firm
• Compliance obligations are not clearly mapped, which means tasks that carry regulatory risk may be delegated to Felcorp staff without the firm recognising that accountability for those tasks cannot be outsourced
• Audit trails are absent or insufficient, which makes it impossible to demonstrate proper oversight if a regulator questions a process or decision made during the engagement

Felcorp's Terms of Service include minimum professional conduct and compliance standards that the engaging firm must meet. These exist specifically to prevent situations where a firm's internal deficiencies create downstream liability disputes with Felcorp. Firms that do not meet these minimum standards may find that their ability to seek remedies under the agreement is limited.

Audit Exposure During Active Engagements

One of the most commercially sensitive scenarios in any outsourcing arrangement is when a compliance audit or regulatory review occurs during an active engagement. If the audit identifies a fault, failure or deficiency, both parties need to be able to clearly demonstrate where responsibility sat at the time of the finding.

Felcorp's position on this is straightforward:

• If Felcorp staff were following documented SOPs provided by the firm and the fault relates to the content or adequacy of those SOPs, responsibility sits with the firm
• If the fault relates to a failure in data security and the systems, access controls or configurations were managed by the firm, responsibility sits with the firm
• If the fault relates to a regulatory obligation such as a missed lodgement, incorrect disclosure or non-compliant process, responsibility sits with the regulated entity regardless of who performed the task
• If the fault relates to a failure within Felcorp's own controlled environment where Felcorp had full administrative control, Felcorp will address it under its own governance framework

For this reason, Felcorp requires that the boundary between its operational responsibilities and the firm's regulatory responsibilities is documented before the engagement begins. This protects both parties and provides a clear reference point if an audit or dispute arises.

Felcorp's Terms of Service

Felcorp's Terms of Service contain detailed provisions on limitations of liability, minimum data security standards, minimum professional conduct and compliance standards, and the circumstances under which Felcorp may or may not be held liable. Key provisions include:

• Regulatory compliance liability exclusion where Felcorp is not liable for any consequence arising from regulatory enforcement where the Felcorp staff member was acting in accordance with the firm's documented instructions or SOPs
• Cyber-related incident liability exclusion where the incident was attributable to the firm's systems, credential management, access controls or failure to meet minimum data security standards
• Minimum data security standards that the engaging firm must maintain throughout the engagement as a condition of service
• Minimum professional conduct and compliance standards that the firm must uphold including workflow oversight, practice organisation, technological competence and adequate staff instruction
• Burden of proof requirements where any claim against Felcorp must be supported by an independent third-party assessment demonstrating direct attribution

These terms are not negotiable defaults. They define the operating framework under which Felcorp delivers services and the boundaries within which liability is assessed. Firms considering an engagement should review the full Terms of Service before proceeding.

For more information on how Felcorp structures its insurance BPO engagements, see How Our Insurance BPO Service Works. For a full overview of Felcorp's security and compliance documentation, visit Security and Compliance Resources.