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How insurance industry can turn regulators’ demands to its advantage

How insurance industry can turn regulators’ demands to its advantage

How insurance industry can turn regulators’ demands to its advantage The following is an opinion article from Colin Dean, an EMEA insurance and financial services specialist with Hyland, creator of OnBase.  

As British-based firms fight to retain their place in the world insurance market, the stringent levels of regulatory scrutiny they currently face are at best an unwelcome extra cost - and potentially an audit nightmare. However, with the right technology and approach, the discipline needed to satisfy the latest regulations can be turned into a strength that offers up a plethora of opportunities.

Even before changes to the UK’s trading status in the world so rudely erupted on to the agenda, many in the insurance sector had voiced concern that the FCA’s increased focus on their daily consumer transactions and activities was becoming a heavy burden to bear, given the need to retain an edge on ambitious ‘challenger hubs’ around the globe seeking to take a larger share of their regional insurance trade.

Multinationals are not the only ones affected: the insistence on robust risk management for the purposes of Solvency II and other regulatory necessities has already filtered down from underwriters to brokers, who, as the point of contact with the customer, are required to record ever more accurate and detailed information, so that risks can be assessed, and shown to be assessed, by all those involved along the chain. Given the sheer volume of individual insurance arrangements taking place, this means firms of all sizes are now handling and storing vast volumes of data.

Regulation is nothing new, but the sheer volume means there are now far greater challenges in reducing the costs associated with being compliant. Years of on-off IT investments, resulting in one system after another, have left many with a complex technology legacy, involving numerous formats, across various departments and divisions. At the same time, the advent of innovative digital formats for insurance broking means that data arrives in ever more disparate ways. The time has come for insurers to tackle this challenge in a positive and pro-active way, and move towards a single enterprise information platform.

By placing an enterprise hub at the heart of their digital activities – both those that are internal and the customer-facing technologies – firms can at once offer a credible audit trail and provide a focal point that allows executives to view the full workings of a company, simply and efficiently. The efficiencies that can be gained from this improved management overview, and the potential for automated workflow management that comes with such a strategy, could in themselves more than offset the cost of regulation. But it has further value in terms of security, improved risk management and greater potential for innovation.
Enterprise information strategies are critical in developing new ways of working, by ensuring that executives charged with innovating can gain the necessary overview to make their changes effective. At the same time, management frameworks now demand tight permission enforcement at their core, allowing businesses to control where critical documents are created, and who can modify them. A document will not be compliant if it cannot be tracked back to its original sources. A full trail of all activity is automatically required, carried out and fully traceable for each component or segment.

For example, brokers will be concerned to ensure all sales are made under the latest terms and conditions, appropriate to each jurisdiction in which they operate. While it is desirable that these be kept scrupulously up-to-date, it is not likely that a firm would want an unauthorised employee to amend them. A modern enterprise platform can automatically select the latest T&Cs to go with a policy, and ensure that only those with required permissions change the content.

Further examples of the advantages offered by tighter control of data flow and digital information include the area of codes of conduct and ethics training, thanks to the system’s ability to disseminate policy and procedures, or compliance updates. At the same time, management can establish a testing regime that cannot be avoided, and is automatically recorded to show that appropriate training has taken place.

Similar benefits extend to customer complaint management, and anti-money laundering procedures – in both cases, a single system can detect, track, monitor, action, escalate and report activities where necessary, while proving it has all been done.

To benefit from such integration, a seamless and integrated environment that can effortlessly access all data and content is required, which in turn will provide the prerequisite transactional audit and regulatory insight.

With risk management and compliance likely to remain at the heart of most brokers’ strategic focus, those firms that can manage the information flow easily and seamlessly – and harness it to their own advantage – will not only avoid audit nightmares and regulatory censure, but also enjoy improved management performance and efficiency.

The views expressed in the article above are those of Colin Dean, an EMEA insurance and financial services specialist with Hyland, creator of OnBase, www.onbase.com. They do not necessarily reflect those of Insurance Business.

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