Summary The PRA’s supervisory statement on outsourcing arrangements and managing third party risk requires insurers to take action now, to ensure that outsourcing agreements which are currently being negotiated comply with the new guidelines. On 31 March 2021 the PRA released a new supervisory statement relating to outsourcing arrangements and managing third party risk (“ SS2/21”). The PRA has also published a policy statement on outsourcing and third party risk management, which summarises the feedback it received to its original proposals and explains the rationale for SS2/21. SS2/21 applies to various types of firms, including all UK Solvency II insurers and UK branches of overseas insurers. The PRA requires insurers to be compliant with SS2/21 in relation to outsourcing agreements entered into on or after 31 March 2021 by the time the new requirements come into force on 31 March 2022. In practice this means insurers should start complying now, to avoid needing to renegotiate before 31 March 2022 deals which have only just been finalised.