Co-Sourced Solutions: Strengthening Resilience Across Insurance Control Functions

1. Rising Regulatory Scrutiny and Less Tolerance for Under-Resourcing

Inspections, thematic reviews, and supervisory letters are hammering the same themes:

• Weak model governance
• Shallow validation
• Insufficient challenge
• Overstretched actuarial, risk, and compliance teams

Co-sourcing helps insurers demonstrate what supervisors want to see: credible resourcing, independent challenge, and sustainable delivery - not heroics from the same two people every quarter-end.

2. A Structural Talent Challenge

Across the core control functions, particularly actuarial and risk teams, insurers face a structural talent challenge that the market isn’t resolving.

Recruitment cycles are long, specialist skills are increasingly niche, and retention rates are declining. Workforce expectations have also shifted: hybrid working is now mandatory for many, experienced specialists prefer portfolio careers, and younger professionals prioritise flexibility and balance over traditional corporate roles.

Co-sourcing fills this gap by providing scalable, on-demand expertise - including specialists who would be impractical or too costly to hire permanently - multiplying internal capability without adding permanent headcount.

Full outsourcing - common in actuarial and internal audit - can create over reliance on external providers. The excessive dependency can leave firm’s unable to run a competitive tender process when fees inevitably rise. Co-sourcing avoids this by keeping the power balance in check.

A co-sourced model ensures:

• Internal ownership of key judgements
• Alignment with regulatory expectations on oversight and independence
• Retention of critical business knowledge
• Access to technical depth as needed

The result is a more resilient, transparent, and sustainable operating model.

Co-sourcing delivers value when implemented correctly - but it is not a silver bullet. Issues arise when roles are unclear, knowledge becomes concentrated with external teams, documentation fragments, or independence requirements are misunderstood, particularly in risk and internal audit. The most common pitfall is internal oversight slipping due to overreliance and overfamiliarity with co-sourced providers who are assumed to handle everything.

These issues are preventable. Clear governance, defined ownership, and structured knowledge documentation ensure that co-sourcing strengthens internal capability. Success requires active management, with accountability and oversight firmly retained within the organisation.

Strong co-sourcing models maintain internal accountability, embed external expertise where it adds most value, ensure transparent governance, document decision paths, and scale capacity with business cycles. Smooth integration with existing controls ensures continuity even when existing control frameworks, ensuring continuity even when key personnel leave.

Beyond the compliance assurance, co-sourced solutions can provide flexibility to manage workload, reduce reliance on permanent headcount, and give access to specialist skills that would be costly or impossible to hire full-time. Cost efficiency follows naturally, but the primary goal remains strengthening internal capability and operational resilience.

Rising regulatory, risk, and reporting expectations require operating models that deliver resilience without compromising oversight. Co-sourcing reinforces internal teams with specialist expertise, independent challenge, and market insight, providing a sustainable, well-governed, and cost-effective way to maintain technical depth and operational continuity.

Finalyse helps insurers translate this hybrid approach into practical solutions. Examples include:

• Scaling actuarial teams during year-end and Solvency II reporting cycles
• Providing specialist risk and model validation expertise at short notice
• Supplementing internal audit functions with independent actuarial expertise for bespoke audit deep-dives
• Assisting compliance teams during regulatory remediation projects without adding permanent headcount

By embedding expertise, maintaining internal ownership, and offering flexible, scalable capacity, Finalyse enables insurers to meet regulatory expectations, manage market and operational shocks, and strengthen the resilience of their control functions.