Carriers can use technologies such as business process management to help navigate the regulatory maze.
This past year saw a bevy of legislative initiatives come to the forefront, from the extension of Terrorism Risk Insurance Act (TRIA), to the creation of an Optional Federal Charter (OFC), to the reworking of flood insurance. To find out the technologies carriers can employ to keep pace in this fluid regulatory environment, Insurance Networking News asked Pam Ewing, senior product manager for Insurance Compliance Solutions at Minneapolis-based Wolters Kluwer Financial Services, for her take on these issues.
INN: Of all the regulatory initiatives currently under consideration, which one do you feel has the greatest potential to alter the way insurers conduct business?
PE: TRIA, the expansion of the NFIP, and other disaster-related plans all get at core business issues and will influence broad-ranging product planning decisions. These are all initiatives that would affect insurance coverage and product/pricing design, and would have the greatest potential impact.
INN: How would passage of an OFC alter compliance?
PE: The proposed changes to rating laws is a major issue for the P&C industry. Under the OFC, national insurers would no longer be subject to the state-based rating laws, but would become subject to federal antitrust laws. The handling of regulation of forms would also change, and depending on which version of the bill—if either—is enacted, the specifics of processing requirements would vary. Either way, the prior approval of forms would not be required.
INN: Have the efforts to modernize laws kept pace with the technology?
PE: Not really. If regulatory requirements had been updated to reflect technological advancements, I think we would see a lot more insurance companies conducting business by electronic means. In the insurance sales and policy issuance processes, there are still many individual steps, required by laws and regulations, that have not been adapted from a regulatory perspective to allow for a non-paper based transaction to occur.
INN: What new or emerging technologies are most useful when navigating the thicket of regulations?
PE: Researching the vast body of insurance regulatory requirements is a big challenge. What we are seeing is improvements in the management of that content by leading providers that deliver ease-of-research benefits to the industry. For example, technology allows providers to create content management tools that can help their industry experts easily “tag” content electronically with insurance-specific terms. Technology also allows for delivery of product interfaces that present compliance professionals within insurance companies with search tools that are based on insurance-specific terminology. This makes it easy for compliance professionals to adopt a research tool quickly, thereby jump-starting productivity and ensuring accurate results.
INN: What strategies can insurers use to make sure they correctly track and implement changes to regulations?
PE: Insurers should try to leverage technology, specifically business process management technology solutions that are combined with expert analysis of regulatory content. This powerful combination can improve a compliance professional’s ability to automatically receive and route the content that pertains to their organization much more quickly than most companies are able to do so today. It’s a two-part “win” for an insurer—they gain efficiency by reducing the time needed to analyze the impact on the company, and can expedite the implementation process while simultaneously achieving better overall compliance.
INN: Can efforts to stay compliant be done gradually, or will carriers be better off “ripping and replacing” existing infrastructure?
PE: With more than a quarter of a million regulatory documents for insurers to navigate, understand and apply, a gradual approach is probably the most realistic. However, this creates a mandate for insurers to prioritize how they spend resources on compliance. The good news is that there are technology-based solutions that help insurers identify the areas that are likely the most risky from a regulatory compliance exposure perspective. Armed with information about trouble spots in past compliance performance, an insurer can address compliance processes and infrastructure in a way that provides the best protection to the organization.
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