In the insurance business, three things are certain: death, taxes and regulation. Sadly, failure to comply with the latter can lead to more of the former — commercially speaking, that is.
Compliance is such a big deal because insurance regulation takes place on so many levels — locally, state by state, federally, and country by country if you operate internationally. And each new administration or legislative session is liable to alter the mandates set by its predecessors. That makes for an ever-changing swampland of confusing and often contradictory rules and restrictions.
But insurers are discovering that the swamp can be drained, and compliance doesn’t always have to be about red tape and adding cumbersome new procedures. There are other, more elegant ways to satisfy regulatory requirements that actually streamline business operations even as they mollify state boards and industry regulators.
As Lenny Liebmann describes in this issue’s cover feature, insurers are discovering that IT initiatives driven by broader business performance goals often help ease the regulatory burden, too. By making fruitful investments in their core business systems, many insurers have also been able to reduce the “drag” that regulatory compliance exerts on their operations.
As one insurance exec explained to Liebmann, her company “went paperless to better manage our business processes and business continuity. Compliance with document retention and discovery requirements was an additional advantage.”
Successful managers have long realized that compliance is much less of a burden for businesses that are well run and efficient. Investing in technology that increases those efficiencies and improves an insurer’s competitive posture is the most graceful and productive way to further lighten the load.
And while insurers may still fall short at times when it comes to adhering to regulations, being able to demonstrate reasonable due diligence to regulators can go a long way when things do go awry.
As Sarah Mims, deputy general counsel at XL Group, points out to Liebmann, “If you can quickly give regulators electronic access to the business records they want and demonstrate reasonable efforts to comply with the intent of regulations, you can usually mitigate any fines and penalties associated with the discovery of some accidental breach.”
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