Spin-Off / Outsourcing Officer

A Spin-Off / Outsourcing Officer (Ausgliederungsbeauftragter) governs the outsourcing of functions and the use of material service providers at an insurance undertaking, within the governance system required by the Insurance Supervision Act (VAG). Outsourcing itself is governed by Section 32 VAG, supplemented by the supervisory minimum requirements for governance (MaGo) issued by BaFin and the relevant EIOPA guidelines on outsourcing and system of governance. The duty to notify the supervisor sits elsewhere, in Section 47 numbers 8 and 9 VAG.

Under Section 32 paragraph 1 VAG an undertaking that outsources functions or insurance activities remains responsible for meeting every supervisory rule. Section 32 paragraph 2 VAG protects the board's ability to steer and control and the supervisor's audit rights, including data access, the provider's cooperation with the supervisor and access to its premises. For important functions, Section 32 paragraph 3 VAG adds that the quality of governance must not be materially impaired, operational risk must not rise unduly, and service to policyholders must not be put at risk.

Before an outsourcing is entered into, the officer ensures a documented risk assessment: whether the function is important, the risks involved, the suitability of the provider, and any concentration or sub-outsourcing concerns. The agreement must then secure the information and instruction rights required by Section 32 paragraph 4 VAG and bring the function into the undertaking's risk management; where an important function goes to a provider in a third country, the contract must name a domestic agent for service. That assessment belongs before signature. Done late, it leaves no evidence that the choice of provider rested on a risk view, and the leverage to negotiate audit rights is already gone.

Once live, the relationship is monitored continuously: service levels, the provider's continued suitability, sub-outsourcing changes, and incidents. The intention to outsource important functions is notified to the supervisor under Section 47 number 8 VAG together with the draft contract, and later material circumstances under Section 47 number 9 VAG. The officer maintains an outsourcing register and the evidence that each arrangement was assessed, contracted and monitored in line with Section 32 VAG, MaGo and the EIOPA guidelines. Recurring findings concern the gaps between those steps: services bought as consultancy and never classified, monitoring reports that only restate the provider, and exit provisions with no named alternative. Credit institutions run a comparable function under a separate framework, where the German term is Auslagerung.