Newsletter
Draft "Regulations Governing Internal Operating Systems and Procedures for the Outsourcing of Insurance Enterprises Operation" announced by Taiwan Financial Supervisory Commission
Over a decade, when outsourcing operations, Taiwanese insurance enterprises have been following the "Directions for Operation Outsourcing by Insurance Enterprises" (the "Directions"), an administrative directive announced by the Financial Supervisory Commission (the "FSC")in July 2010 and undergone multiple amendments. To enhance and strengthen the legal framework for insurance supervision, and in view of the necessity for insurance enterprises to establish internal operating systems and procedures when outsourcing operations to ensure operational quality and customer rights and interests, as well as to mitigate potential risks, the President, in June, 2025, promulgated the amendment to Article 148-3 of the Insurance Act, adding Paragraph 3 thereto: "If an insurance enterprise outsources its operations, it shall establish internal operating systems and procedures regarding the scope of the entrusted matters, protection of customer rights and interests, risk management and internal control principles. Regulations governing the above shall be prescribed by the competent authority". This provision authorizes the competent authority to prescribe relevant regulations regarding the outsourcing of operations by insurance enterprises in order to “level up” the hierarchy of the existing Directions from an "administrative directive" to a "regulation".
To align with the aforementioned amendment to the Insurance Act, the FSC has drafted the "Regulations Governing Internal Operating Systems and Procedures for the Outsourcing of Insurance Enterprises Operation" (the "Regulations") based on and in replace of the Directions. The change of hierarchy of the law strengthens supervisory effectiveness and enhances regulatory transparency.
The FSC announced the draft of the Regulations in October 2025. The draft Regulations consist of 21 articles, and are generally consistent with the current Directions. However, in order to improve the regulatory framework for outsourcing of operations by insurance enterprises, the FSC, when developing the draft Regulations, not only referred to the Directions but also made certain adjustments. The main differences between the Directions and the draft Regulations are as follows:
I. Allowing Insurance Enterprises to Outsource Tax-Related Land Registration Matters
1. Pursuant to Subparagraph 8, Paragraph 1, Article 3 of the Directions, the scope of outsourced operations by insurance enterprises includes "land registration or real estate management services, and disposal of collateral assumed due to debt claims".
2. To meet the practical needs of insurance enterprises, Subparagraph 8, Paragraph 1, Article 3 of the draft Regulations provides that "land registration and related tax processing or real estate management services, and disposal of collateral assumed due to debt claims", explicitly stipulating that, in addition to outsourcing matters such as land registration or real estate management, insurance enterprises may also outsource related tax processing operations.
II. Deletion of Provisions Related to Insurance Enterprises Entrusting Insurance Brokers to Collect Insurance Premiums
1. According to Item 2, Subparagraph 3, Article 8 of the Directions, insurance enterprises shall establish internal control principles and operating procedures for outsourcing operations. When an insurance enterprise outsources premium collection operations, insurance brokers and insurance agents shall, in accordance with Paragraph 1, Article 40 of the Regulations Governing Insurance Brokers and Paragraph 1, Article 40 of the Regulations Governing Insurance Agents, directly deliver the premium payments collected on behalf of the insurance enterprises to those insurance enterprises.
2. However, pursuant to Paragraph 1, Article 40 of the Regulations Governing Insurance Brokers, insurance brokers shall be entrusted by the policyholders, not the insurance enterprises, to collect insurance premiums. Therefore, Item 2, Subparagraph 3, Article 8 of the draft Regulations provides that "insurance agents shall directly deliver the premium payments to the insurance enterprises in accordance with Paragraph 1, Article 40 of the Regulations Governing Insurance Agents".
III. Stipulating that Outsourcing Contracts Shall Specify a Contract Term
1. Pursuant to Subparagraph 1, Paragraph 1, Article 9 of the Directions, matters that shall be specified in an insurance enterprise's outsourcing contract include "the scope of outsourcing and the responsibilities of service provider".
2. To ensure that the contract has a clear expiration date, thereby strengthening risk management, Subparagraph 1, Paragraph 1, Article 9 of the draft Regulations additionally require that the contract term shall be specified in the outsourcing contracts.
There is a 60-day public commentary period for the draft Regulations (i.e., commencing from October 9, 2025). The public may raise any feedback/comments during this period. Further, as required by Article 16 of the Directions for Legislative Procedures of Central Administrative Agencies which provides that the competent authority shall complete the promulgation of the sub law within six months after the promulgation and implementation of the parent law, the Regulations are expected to officially take effect in December of this year.