Insurance companies and MGAs are grappling with more rules than ever, as regulators strive to keep up with a rapidly evolving sector. Regulation is vital for a healthy and thriving insurance industry; to maintain consumer confidence and continued growth. However, it can also be a headache for insurance companies; in a recent survey of insurance firms, compliance was their biggest concern, with 48% worried about the costs of failing to meet their responsibilities.
Complying with new and existing regulations brings a significant administrative burden, with insurance companies required to continuously update their processes and reporting to follow the rules correctly. This is where automation through insurance software can be a game-changer by ensuring consistent processes, quality data, and removing much of the time-consuming manual paperwork and reporting required. Modern cloud systems also automatically update to incorporate changes to the law.
Here, we dig deeper into how automating insurance processes can help insurance companies comply with some of the most recent and significant trends in regulation and compliance:
Customer satisfaction and transparency
A common theme in insurance regulation, rules such as the Consumer Duty Regulations in the UK, hold companies accountable for achieving the best customer outcomes in how they design, market, price, and sell their products. While personal service is hugely valuable in insurance, automating elements of the customer lifecycle can help provide consistency and transparency at every stage. For example, insurance software empowers companies with quality data to understand customer needs, price products appropriately, and enable them to automate and streamline how they communicate important information. It can also aid transparency by enabling customer and broker portals where key documents are easily accessible. Critically, it ensures firms have a comprehensive record of how they work, for reporting to regulators.
Fair pricing
The UK introduced the General Insurance Pricing Practices regulations in 2022, to prevent price walking and dual pricing, and similar regulations are also in place in the EU and around the world. Technology is again vital to aid companies in analysing historical pricing, customer, and policy data to ensure that future pricing is accurate and justified. New systems can also draw on artificial intelligence and machine learning to develop transparent pricing models and carry out checks to alert staff to any discrepancies. The breadth of communication channels enabled by automated systems also allows for regular customer updates, feedback mechanisms and a comprehensive audit trail.
Data protection and cyber security
The explosion of data in recent years has led to a flurry of data protection regulations, most famously the GDPR, which is in force across the EU. With strict rules about what data can be stored, for how long, and how it must be protected from cyber-attacks, it places significant responsibilities on insurance firms. For those storing data on disparate legacy systems, this can seriously hinder compliance, while making systems more vulnerable to attack. By ensuring data is stored securely and in accordance with regulations, an end-to-end insurtech system removes much of the risk involved.
Finance and accounting
Insurance companies around the world are subject to strict and complex rules regarding their finances. For example, Solvency II in the EU and UK takes a risk-based approach to capital requirements, combined with various stipulations regarding governance and accountability, risk assessment and management, and reporting. A fully integrated insurance technology system can be a huge benefit in aiding with this and other financial compliance, by ensuring high-quality, comprehensive data to drive more accurate risk calculations, monitor capital, and put alarms and notifications in place to alert team members of any issues. Creation and submission of reports can also be automated, ensuring consistency and accuracy, while reducing manual input.
Compliance can be a significant cost for MGAs and insurance companies, not only in the time and resource it demands but also in the risk of large fines for getting it wrong, not to mention the reputational fallout that comes with that.
By investing in process automation, through an end-to-end system such as Insly, insurance companies can reduce the admin burden, minimise human error and oversight, and make reporting a breeze. Insly is built by former insurance professionals alongside technology experts with a deep understanding of the sector and how regulations are evolving. So, you can be confident that compliance is handled by the system, leaving your staff to focus on what they do best – serving customers and growing the business.
Get in touch with the team today to find out more about Insly’s no/low code platform and organise a demo.
