In general, the insurance undertakings employ adequate governance and control practices in their ICT operations. But FI has also observed that some undertakings have difficulties identifying and managing the consequences of outsourced ICT operations.
As the digitalisation of the financial sector increases, creative innovations lead to new insurance products, business models and partnerships, which in turn require a new level of risk management, governance and control of ICT operations. This is particularly the case in the governance of outsourced ICT operations.
However, outsourcing can lead to both better service quality and cheaper ICT operations, and new or small actors, with the assistance of professional ICT firms, can thus offer modern and comparatively cheaper insurance services in markets where they would otherwise have been uncompetitive.
The scope and extent of ICT outsourcing agreements can have a large impact on an insurance undertaking's ability to overview and manage the consequences of its strategic ICT choices. Given the increased digitalisation of the insurance sector, FI's analysis points to a number of focus areas in need of improvement.