Compliance in The Insurance Industry

The insurance industry has been experiencing an increased number of compliance infractions over the last few years. Accordingly, compliance risk management has become a top priority for those in leadership. Staying compliant has become more challenging due to increased regulations, difficulty finding people to fill this role, and inflation creating a need for cost reduction. There are also emerging risks of cyber threats to consider. With all these risks and challenges, it’s critical to be strategic as we improve compliance and effectively serve policyholders.   


How Can Insurers Ensure Compliance?

Insurance companies are feeling the pressure of increased regulations and the personnel to follow them on one side and the need to be cost-efficient on the other. The challenge comes in finding the most effective use of time and resources. How can a company improve compliance with fewer people and less financial outlay?

According to the professional services network, Deloitte, there are three key areas insurers should invest in to improve compliance: making good use of data and digital tools, developing skills and talent, and improving the compliance framework. Let’s dig into each of these. 


#1 Use Data & Digital Tools

There are now so many apps and online tools we can utilize instead of relying on manual labor. It’s just a matter of taking the time to learn and set up these new systems initially. Once the processes are in place, compliance becomes automated, saving time and effort. 

The first thing to assess in moving toward digital tools is current data quality and completeness. When a dataset is divided and saved on different drives or in an inconsistent format, it’s more challenging to evaluate. Therefore, it’s necessary to go through the data manually, gather it from all locations, look it over for accuracy, and correct any errors.

After resolving any data quality issues, professionals can create use cases to provide insight into how best to use the data. One option is to use a scan to look for regulatory changes. A data expert, either inside or outside the organization, can help advise the next steps in selecting digital tools and creating efficient data pipelines. 

Relying more on technology can help free up professionals for other tasks or to perform helpful analytics, such as trend analyses, to identify potential risks. The result is that more focus is given to prevention, reducing the risk of costly non-compliance remediation. 

The digital organization of data also makes it possible to analyze large amounts of data at once rather than pulling data samples to make risk estimates. It’s also possible to easily extract data from the data management tool and upload it into the Systematic Integrity Risk Analysis (SIRA), saving time and effort. 

Using digital tools makes data analysis more accessible and more likely to be used on a frequent basis.


#2 Develop Knowledge & Skills 

With the constantly changing state of assets, modes of communication, and threats (all moving online), there will be more regulations and an increased need for compliance professionals within the agency. These professionals will need to engage in continuing education and acquiring new skills as they adapt to the quickly changing landscape. 

The increase in laws and regulations impacting the insurance industry, such as sustainability regulations, will require compliance professionals to keep their knowledge of these statutes up-to-date to stay compliant. They may also need to develop new skills, such as utilizing new technology, understanding data analytics, etc.

If no one currently on staff has the appropriate background or expertise, the agency will need to attract new talent to fill that role. To keep costs associated with human resources down, it’s worth investing in new technologies and tools to make daily operations more efficient. 


#3 Improve the Compliance Framework

The third area of investment for insurers to ensure compliance is to improve their compliance framework. While many companies have already worked to do this in recent years, there’s always room for improvement. Current policies and procedures may not fully address risks and controls. That’s where a self-audit comes in.

Next, the focus should be on building a solid foundation for the compliance framework. From there, professionals should work on developing a monitoring and control framework that’s both effective and efficient. It should be linked to periodic risk assessments, control statements, compliance reporting, and issue-tracking systems. Feedback loops should also be embedded in the framework to manage overlaps.

The more effective and efficient an agency’s framework is, the less risk it will have of breaching compliance and needlessly spending time and money to address compliance incidents. 

Take Committed Action

While every agency is different, there are certain action steps that can help you become more effective with compliance:

  • Minimize manual labor and utilize digital tools for control monitoring, risk assessment, and compliance reporting. That frees up professionals for strategic planning.
  • Create a curriculum for compliance professionals to expand their knowledge and skill sets.
  • Clearly define which regulations the compliance function is responsible for and which it isn’t.
  • Resolve all data quality issues and move data to a centralized digital tool. Then create efficient data pipelines.

To improve compliance, get the right people in the right places, provide them with up-to-date training, and minimize data entry and manual tracking. Digital tools can help make everything more accurate and efficient. 


The Future of Compliance

Now is the time to work on improving compliance and doing so efficiently. Technology and regulations aren’t going anywhere, and the economic situation is unpredictable. To prepare for the future, create your compliance framework, bring the right people on board, develop knowledge and skills, and leverage technology to create the most effective and efficient compliance framework possible. The insurance sector specializes in preparedness and risk management. Make the compliance function of business as “future proof” as possible. For compliance, that means improving your data quality, regularly monitoring, and making the best use of both people and technology.

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