Compliance

New York - The Insurance and Actuarial Advisory Services (IAAS) practice of Ernst & Young LLP has released its quarterly outlook identifying the need to take risk management beyond legislative and regulatory compliance to the next level.Enterprise risk management (ERM) is beginning to move to the top of the "CFO to-do list" as companies become increasingly sensitized to the heightened need for enhanced risk governance, management and measurement, according to Ernst & Young. This includes an acknowledgment that there needs to be a more disciplined approach to risk measurement and risk management.

Kansas City, Mo. - The National Association of Insurance Commissioners (NAIC) today announced that the Market Analysis Review System (MARS) is now available for use by all state market analysts. This technological enhancement, which reflects regulators' focus on market regulation, is designed to automate the market analysis of companies, including a state's Level 1 analysis review.

New York - Complying with the PATRIOT Act is a top concern for boards of financial services firms, according to a survey of 210 board members conducted by PricewaterhouseCoopers at its 2005 Financial Services Audit Committee Forum, held last week in New York. Sixty-five percent of those surveyed were audit committee members or chairs, who serve a crucial governance role in corporate oversight of compliance in today's post-Sarbanes-Oxley world.The PATRIOT Act, passed after the 9/11 terrorist attacks, requires financial services companies to enhance customer identification capabilities, monitoring systems, and suspicious activity reporting (SAR). The expanded obligations required by the Act, increasing scrutiny by regulators, stiff penalties paid by many institutions for non-compliance, and the increase in Suspicious Activity Report (SAR) filings, has made audit committee members particularly concerned about how their organizations manage compliance with the law.

Early in his career, Gary Kaplan spent a decade in loss control engineering, Then he moved into the underwriting arena and found that all the effort he and his colleagues had put into their engineering was arbitrarily applied to underwriting decisions."When I went into underwriting in 1988, I was appalled at how loose it was-the lack of structure and the lack of guidelines," says Kaplan, who is now senior vice president and chief underwriting officer at Zurich. "There was no consistency. The way business was priced was very disappointing to me after 10 years in engineering. I said, 'This is how all my work got translated into a price?'"

A new study that purports to pinpoint the economic losses stemming from state-by-state regulation of the life insurance industry finally provides the smoking gun that advocates of optional federal regulation say they need to bolster their case before Congress.Commissioned by the American Council of Life Insurers (ACLI), the study contends that life insurers could save more than $600 million annually, or $6 billion over 10 years, if a federal regulatory charter option were enacted.

For better or worse, the reinsurance industry is in the middle of its 15 minutes of fame. With regulators shining a spotlight-some might call it a blinding one-on the industry, insurance companies are being forced to take a hard look at their reinsurance practices.Regardless of the overall impact the attention will have on the reinsurance market-specifically on finite reinsurance (see "Regulators Focus on Finite Reinsurance" ), it's a safe bet to say that insurance carriers will start to more closely examine their reinsurance automation needs, according to Donald Light, senior analyst at Celent Communications Inc., a Boston-based financial services research and consulting firm.

In spite of centuries of sales experience, most insurers rely heavily on price for acquiring and retaining customers. The reality is that customers base insurance purchasing decisions on many factors. While this does not mean that we can ignore pricing, it does mean that alternatives exist for insurers to remain competitive.For some companies, the frustrating cycle of hard and soft markets will not exist. By relying on the power of data mining, they can maintain the consistency and accuracy of their underwriting decisions; they can significantly reduce the impact of fraudulent claims; and they can have a better understanding of their customers' wants and needs.

Boston - Will Katrina change the insurance industry in fundamental ways? Have loss patterns changed from "small and frequent" and "large and infrequent" to "very large and not infrequent?"In a new report, "After Katrina: What Now for the Insurance Industry?" Celent Communications Inc. examines the immediate and long-term implications of Katrina and describes best-case and worse-case scenarios of its impact on the insurance industry and select insurance providers.

Jersey City, N.J. - ISO's guide on state insurance laws and regulations, the State Filing Handbook, is now available in a new Web-based format designed to make it easy for insurers to access the information they need when they need it. The State Filing Handbook is available through ISOnet, ISO's secure Internet platform for delivering information to property/casualty insurers.The online State Filing Handbook features multi-state reports on a broad range of filing topics. Insurers can select a single topic, a type of filing and a number of states -- or choose all states -- and the handbook will generate a table summarizing the requirements for those states. A keyword search feature includes regulations, bulletins and forms to make it easier to locate the exact topic or section.

Kansas City, Mo. - The National Association of Insurance Commissioners (NAIC) has redesigned its Web site to be more user friendly to both NAIC members and first-time visitors. Work on the new site began in May after an internal audit was conducted to focus on potential areas of improvement and enhancement, with the goal in mind to create an easier, more accessible online resource for all audiences."Improvements made to our Web site should make finding information much easier for anyone who is seeking insurance information," says Catherine J. Weatherford, NAIC executive vice president and CEO. "We've grouped information into categories that should simplify searches for specific topics."

Acton, Mass. - CCH Insurance Services, a part of Wolters Kluwer Corporate & Financial Services division, has launched a new micro site summarizing regulatory compliance information for insurers responding to catastrophe in the wake of Hurricane Katrina. The web site, located at www.insurance.cch.com/katrina is free of charge as a public service to insurers."Affected states are now issuing requirements and other directives specifically related to this catastrophe," says Joe Bieniek, compliance manager for CCH Insurance Services. "We want to provide insurers with a resource that will help them easily determine what is required in Alabama, Florida, Louisiana, and Mississippi so they can respond to claims quickly, avoid confusion, and maintain compliance."

Nearly a year has passed since New York Attorney General Eliot Spitzer charged insurance brokerage firm Marsh & McLennan with rigging bids to maximize its commissions with insurance carriers.Allegations against Aon, AIG, ACE and other brokers and insurers followed-and within weeks, the country's largest insurance brokers-Marsh, Aon and Arthur J. Gallagher-as well as AIG and ACE had ceased the practice of accepting (or paying) contingent commissions.

March 2002: Upset about the size of his annual bonus, a global financial services employee planted a "logic bomb" that deleted 10 billion customer records. The incident affected more than 1,300 of the company's servers throughout the United States. The company sustained losses of approximately $3 million-the amount required to repair damage and reconstruct deleted files.

Kansas City, Mo - The officers and members of the National Association of Insurance Commissioners (NAIC) have decided to cancel the Fall National Meeting, which was scheduled for September 10-13 in New Orleans. Approximately 1,500 insurance regulators, industry representatives and interested parties had registered to attend the conference.

Hartford, Conn. - Specialty Risk Services LLC (SRS), a property-casualty third party administrator for workers' compensation and general liability claims, is offering its clients access to a suite of tools to monitor their program's performance on its newly redesigned Web site.In SRS' password-protected Employer's Toolbox, clients have secure access to resources, including industry statistics, employee training materials, libraries of legislative and industry updates, loss control and safety tips, and links to national and industry Web sites.

Hinsdale, Ill. - In the past few years, organizations with contact centers have been at risk of a multi-million dollar exposure due to a phenomenon known as Katz telecom licensing fees. To help educate enterprises regarding their options in this area the Opus Group LLP, an operational performance management firm has published a white paper that describes the benefits of performing a telecom operational analysis after receiving a so-called "Katz letter."Ronald A. Katz telecom licensing fees are assessed for the use of technologies covered under a variety of patents. Most of these patents cover technology that ties telephone and online/computer equipment together, a practice that is almost universal in today's contact centers. The Katz letter estimates the fees owed based on public records and standard industry practices. Until now, organizations have had to choose whether to pay the fees as stated or fight them in court. To date, according to a research note from Saddletree Research analyst Paul Stockford, the Katz organization has never lost a case.

Kennesaw, Ga.--MicroBilt Corp., a provider of decision critical data, and credit industry veteran and attorney Oscar Marquis have formed a joint venture. Called ComplyTraq LLC, the new company will provide Fair Credit Reporting Act (FCRA) compliance, credentialing, audit and training services to the credit and data industries.The joint venture is being formed to serve the growing need for compliance and auditing in an industry that is under increasing pressure from state and federal regulation related to the use of personal information. Through the combined experience of the principals and as regulation increases, the joint venture will assist organizations with compliance and auditing and will guarantee its services, backed by an insurance policy issued by Lloyd's of London.

Washington, D.C. - There is a clear economic case for structural changes in insurance regulation, namely an optional federal charter (OFC), that could benefit both consumers and life insurers, according to a study conducted by the American Council of Life Insurers (ACLI), Washington, D.C., and Computer Sciences Corporation, El Segundo, Calif.

In one corner, a number of professional organizations support federal regulation of the insurance industry. And, on the opposite side of the ring, other groups support state oversight. The debate over state and federal regulatory control seems to have resurfaced, and a host of parties affected are gearing up for the battle.Some insurance carriers, however, are asking: Does it really matter who's standing when all is said and done? Many insurers simply recognize that there is a need for regulatory reform -and where that control lies is of secondary concern, according to Dick Luedke, spokesperson for State Farm Mutual Automobile Insurance Co., Bloomington, Ill.

New York - More than 90% of risk management executives are building or want to build enterprise risk management (ERM) processes into their organizations, but only 11% have completed such a task, according to a recent report issued by New York-based The Conference Board. The Board, in conjunction with Mercer Oliver Wyman, a New York financial consulting firm, surveyed 271 risk management executives from a variety of industries across North America and Europe.