Thinking about insurance BPO outsourcing? Read this blog before you proceed.

In 2022 alone, CERT-IN reported 13 lakh cybersecurity incidents. That’s 13 lakh opportunities for data breaches. Now imagine what this could mean for you—a custodian of personal, financial, and health information of your trusted clients.

Before you commit to insurance BPO providers, make sure to review their data breach policies. Do they follow compliance regulations? Can they detect and prevent cyberattacks? What is their policy for backups and storage?

Seems overwhelming?

Here’s what will help—a comprehensive compliance checklist to judge the best insurance BPO for you. Follow these, not as an afterthought, but as a necessary prerequisite before choosing an insurance BPO provider.

Why Compliance Matters in Insurance Outsourcing

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As an insurance service provider, data is your bread and butter. Data leaks due to incompetent safeguards can be a death knell for the business. Every dataset is vulnerable to exposure—from policyholder details to banking information. In the hands of cybercriminals, every word is on the hit list.

What happens when you hand over the control of your data to insurance BPO companies? You may be opening the door a little wider for data leaks.

Without careful review, cyber risk in insurance operations may peak, leading to:

• Financial penalties due to non-compliance with GDPR
• Legal complexities such as lawsuits and compensation
• Reputational damage due to loss of credibility

First steps first. Here’s a table explaining the regulatory frameworks to follow when you choose an insurance BPO. Ensuring comprehensive compliance with these laws will be a significant barrier to data theft.

Key Regulations Governing Insurance Data Outsourcing

Regulation / Guideline	Jurisdiction / Sector	What it covers	Penalties for non-compliance
IT Act, 2000 (India)	India – all data handlers	Protects personal data; mandates reasonable security practices	Compensation & legal liability under Sec. 43A & 72A
DPDP Act, 2023	India – all digital data	Consent-based processing, data subject rights, data localization	Fines up to ₹250 crore per breach
GDPR (2018)	EU citizens’ data worldwide	Data privacy, explicit consent, breach reporting within 72 hrs	Up to 4% of global annual turnover
HIPAA (1996)	US – healthcare & insurance	Protects health-related data (PHI/ePHI)	Civil & criminal penalties; multi-million-dollar fines
PCI-DSS	Global – payment data	Secure handling of credit/debit card data	Heavy fines, loss of payment processing rights
IRDAI Guidelines	India – insurance sector	Outsourcing norms, cyber & data security for insurers	License restrictions, monetary penalties
RBI Outsourcing Guidelines	India – financial & insurance outsourcing	Vendor risk management, IT framework, data localization	Penalties, restrictions on outsourcing contracts

Regulatory compliance has to be a determining factor in choosing even the top insurance BPO companies.

Next, we have collated the ultimate compliance checklist for smart and safe BPO insurance services.

The Compliance Checklist: What to Check Before Choosing the Best Insurance BPO

Hiring top insurance BPO companies has its benefits. The strategic offloading of insurance administrations to an expert vendor opens up your time and resources for product development, customer services, and scaling. From policy management, claim processing, to back-office tasks, the best insurance BPO can be your true partner in progress.

Unfortunately, even the top insurance BPO companies may face cyberattacks. The number of data breach victims increased to more than 422 million in 2022, up from 294 million in 2021. And that's not just an abstract number - there are real consequences involved. According to IBM, the average cost of a data breach in 2023 is USD 4.45 million, a 15% increase from 2020.

How do you trust insurance BPO providers with insurance data breach prevention?

Here is a checklist to follow to ensure that your outsourcing partner is up to the task.

1. Vendor Due Diligence

   Research and review your outsourcing partner thoroughly to achieve the best vendor risk management insurance:

   • Cross-check every certification claimed, i.e., ISO 27001, SOC 2, PCI-DSS
   • Investigate if the vendor’s breach history and cybersecurity policies are aligned with the data protection requirements in the insurance industry
   • Check for compliance practices with third-party audits
   • Judge the insurance BPO’s response strategies, including its alignment with CERT-IN guidelines

2. Data Classification & Access Controls

   A primary point to look out for is the treatment of data according to priority and sensitivity. Check data segregation and compliance protocols even in the best insurance BPO before you make a choice.

   • Check if the data is clearly classified into sensitive and non-sensitive. Ensure compliance with the IT Act, 2000, and sectoral norms (RBI, IRDAI, SEBI)
   • Review segregation strategy to avoid expensive data leaks
   • Regulate access controls and encryption policies (AES-256, VPN/SFTP)

3. Contractual Safeguards

   While framing a contract with top insurance BPO companies, employ checks and measures that give you the best possible level of immunization against data breaches or leaks.

   • Ensure that SLAs incorporate data protection clauses, third-party risk liability, and comprehensive audit rights
   • Ensure alignment with ICAI’s Risk Management Framework and MCA’s guidance on outsourcing contracts
   • Back up SLAs with KPIs and have penalty policies for breaches 

4. Regulatory Alignment

   Data protection requirements in the insurance industry remain an ongoing challenge, given the evolution in the type of threats. However, a regulatory framework is in place - one that dictates the collection, processing, and storage of insurance data. Before you commit to any insurance BPO, check its alignment with established regulatory standards.

   • Verify compliance with the GDPR, the Indian IT Act, 2000, and sector-specific regulations from the RBI, SEBI, or IRDAI.
   • Ensure cross-border regulatory compliance - MeitY and data localization protocols should be checked.

5. Technology & Infrastructure Security

   Do a thorough survey of the technological infrastructure of the insurance BPO services before outsourcing your operations.

   • Check if transfer policies are in place (VPN/SFTP).
   • Ensure that all systems, including infrastructure for intrusion detection, storage, and monitoring, are updated.

6. Cyber Insurance

   While choosing top insurance BPO companies, check the following parameters:

   • Ensure that the insurance BPO outsourcing partner possesses an active insurance policy for cyber liability.
   • Check for adequate risk coverage and extended immunity.

7. Incident Response & Reporting

   Prevention in place? What happens if there is a breach - how do insurance BPO companies respond? Check for their crisis response policies before you proceed.

   • Ensure prompt breach notification infrastructure
   • Check for disaster response, recovery planning, and business continuity strategies

Secure Your Insurance Data Today with O2I: Why Us?

Outsource2india (O2I) is your ultimate one-stop destination for quality BPO insurance services. Here’s why:

1. In-depth industry knowledge

   With 26 years of experience, we have comprehensive knowledge of insurance regulations, risk management, and policy administration

2. Solutions tailored to you:

   Our solutions are custom-made to your specific pain points, assuring you of comprehensive solutions and not siloed services

3. Compliance and data security

   Our services are designed in compliance with regulatory standards like HIPAA, GDPR, and PCI DSS—ensuring that your data remains secure and compliant

4. Advanced technological integration

   Leverage our InsurTech capabilities, incorporating elements like robotic process automation (RPA), predictive analytics, and cloud-based platforms

Still not convinced? Let’s take a real-world example.

A full-service, independent US insurance agency partnered with us to manage and update both corporate and individual insurance accounts. We handled critical tasks such as maintaining the Sagitta database, managing accounts receivable, and ensuring 100% accuracy with zero data leaks.

Result:

• Quality : Consistently met and exceeded client expectations, leading to an increase in FTE allocation.
• Value :The client outsourced 40% of their back-office operations to us, citing our reliable quality, cost-effective pricing, and ongoing communication.

Key Takeaways

Choosing an insurance BPO is a crucial decision—one that can make or break the future of your business. The compliance checklist is a good way to evaluate your decision and choice, one that will give you the best immunity against potential data breaches.

Here’s what you should be checking:

• Vendor history :

  Track record, breach history, certifications, and more

• Data classification strategies :

  Effective segregation of sensitive and non-sensitive data

• Contractual Safeguards :

  Well-curated SLAs for shared liability

• Regulatory Alignment :

  Compliance with key regulatory frameworks

• Technology and Infrastructure :

  Transfer protocols, updated intrusion detection, storage, and monitoring

• Cyber Insurance :

  Active data protection protocols and shared liabilities

• Incident Response :

  Strategies for prompt response and notifications in case of a data breach

O2I ticks all the boxes and is your best bet for handling astronomical amounts of insurance data seamlessly and safely. Contact us today for outsourcing your insurance processes.