Celent just published a report on making a silk purse out of a sow's ear in terms of meeting regulatory requirements. (See Bill Kenealy's report.) “While conventional wisdom views regulation as 'sunk costs' insurers can instead view new regulatory requirements as opportunities to create value-enhancing outcomes in areas such as risk management.”
No industry on this planet is more burdened with compliance mandates than the insurance industry.
There are two related challenges when it comes to compliance: the amount of staff time spent manually compiling and producing reports, and the value of such efforts in advancing the business.
In terms of manual one-off reporting, a survey of 211 applications managers I was involved in a couple of years ago found that the average enterprise required at least five full-time employees to handle database monitoring and compliance reporting – which translates into a fully-loaded cost of several hundred thousand dollars per year, maybe even approaching half a million dollars depending on the organization. More automation would alleviate some of these costs, as well as free up staff for more productive activities.
A while back, I also had the opportunity to speak with Lee Dittmar, a principal with Deloitte Consulting, who proposed a better way to look at compliance, he called it “sustainable compliance.” His message was that with the tools and technologies now at our disposal, compliance can more easily be baked into business processes, and even improve those processes.
Essentially, "sustainable compliance" should be built around repeatable and cost-effective processes that employ information identified, collected and integrated from across the enterprise. To meet these challenges, enterprises must closely re-examine and re-align their business processes, policies and rules. The key is to consider compliance as more than just a "project;" instead, it should be thought of as a comprehensive and ongoing "program in which a sustainable infrastructure is integrated into their current and ongoing operations," Dittmar explains.
Companies can leverage technologies such as enterprise data warehouses and performance dashboards to exceed the expectations of legal mandates. "You need a common view of your data to not only meet the letter of the law, but also the spirit of the law," he says. "It also reduces your risk of having a problem. You're going to have more insight into what's happening in your business; you'll be able to identify problems earlier and deal with problems before they become crises."
Don't look at meeting regulations “as just a compliance exercise,” he advises. “Compliance often is a matter of having good processes, good data, and the right systems, where the work’s done by the right people. There really was and continues to be opportunities to improve the process and systems for turning data into information. The reality is that it’s difficult, it is often costly, it is always time consuming for organizations to get the information that they need, and would like to have. “There’s a huge opportunity to do better in that regard.”
Plus, compliance often frees up funds to help achieve a greater business end.
Joe McKendrick is an author, consultant, blogger and frequent INN contributor specializing in information technology.
Readers are encouraged to respond to Joe using the “Add Your Comments” box below. He can also be reached at firstname.lastname@example.org.
This blog was exclusively written for Insurance Networking News. It may not be reposted or reused without permission from Insurance Networking News.
The opinions of bloggers on www.insurancenetworking.com do not necessarily reflect those of Insurance Networking News.
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