The insurance industry has been rattled out of its comfort zone by rapidly growing regulations
Every sector has its share of regulations, some more than others. When a deluge of new regulations hits an industry all at once, that's when you begin to hear words like "concern" bantered about in the offices of c-level executives.
Around the world, the insurance industry - as venerable and traditional an industry it can be - is indeed concerned. It has been rattled out of its comfort zone by rapidly growing regulations. These regulations and compliance standards differ greatly from region to region, but one thing is clear: The global insurance industry of tomorrow will look nothing like the one that's existed for the better part of 250 years.
Regulations, such as Unclaimed Property Act (UPA), Affordable Care Act (ACA) and ORSA in U.S. and Solvency II and Pensions Act in Europe and UK are already bringing numerous changes in insurance business. They are going to pose significant compliance challenges in the future as well. While UPA mandates life and annuity providers to proactively identify deceased policyholders and pay any unclaimed benefits associated; ACA requires insurance companies to provide health coverage to all applicants within prescribed standards and at an uniform rate. ORSA and Solvency II provides guidelines on risk based capital requirements, assessment approach and disclosure by the insurers on a continuous basis, whereas Pensions Act contains provisions to roll out single-tier state pension, bring forward increase in state pension age and introduce bereavement support payments. The next couple of years are going to be critical in the development of global insurance regulations and the industry will witness continued regulatory changes putting additional strain on insurers.
In this ever changing environment, insurers need to invest adequate time, resources and effort for developing the required capabilities to stay compliant and gain competitive advantage. Failure to adopt these regulations in a timely manner will draw significant penalty from the regulatory bodies and negatively affect the company's reputation in the marketplace.
While regulators are introducing stringent regulations to safeguard consumers and collaborating with other regulators across regions to develop and incorporate holistic compliance guidelines; insurers are using technology as a strategic lever to ensure faster and sustained alignment to the dynamic regulatory environment. Insurers are adopting an enterprise-wide data-centric approach and implementing advanced analytics and modern Big Data tools for real-time reporting and statutory filings. Insurers are taking advantage of digital technologies, smart devices and machines to gain access to real-time data and insights at an affordable cost, which goes a long way in helping the organization fulfill its regulatory commitments. Several insurers are investing on digital storage and workflow automation capabilities, which apart from accelerating the business processes and services, also reduces the burden of regulatory compliance significantly. The digitization drive by the insurers is enabling them to effectively address the growing concern of heightened regulatory intervention and develop an agile ecosystem to cater to changing market needs.
In whatever region of the globe - be it the United States or Europe - insurance companies are the ones that are becoming more nimble and better at what they do. They are concentrating on enhancing their offerings so that they become more visible and desirable, in an increasingly competitive market. Whether a country is mandating more private employer involvement or universal healthcare is paid for partly by the government; insurance companies are looking to be prepared for any new regulations.