A Guide to Achieving a Successful Outsourcing Agreement

Everyone is now familiar with the term ‘outsourcing’ as banks, insurance companies and others continue to remove their day to day service functions abroad. Outsourcing has been a feature of the reinsurance market for many years; every run-off, whether of a company, syndicate or book of business, involves outsourcing in one shape or form.

An outsourcing agreement involves the removal of an in-house function to a third party supplier. Outsourcing transactions bear common features which specialist lawyers in the field recognise. We set out below a checklist of these features and guidance on how to address them.

An organisation looking to outsource must think about not just what it is transferring in the short term but also what sort of service it wishes to receive and how best to manage the supplier during the course of the agreement. This involves a range of issues, including: