Managing data to comply with regulation

From the new IFRS 17 inter­na­tion­al account­ing stan­dards to the Gen­er­al Data Pro­tec­tion Reg­u­la­tion (GDPR) and Insur­ance Dis­tri­b­u­tion Direc­tive, insur­ers need to focus on effec­tive­ly man­ag­ing their data to ensure they don’t end up falling foul of bur­den­some reg­u­la­tions.

“There is more scruti­ny from reg­u­la­tors and audi­tors who are demand­ing a deep­er look into the busi­ness, as well as mak­ing sure that the num­bers being report­ed exter­nal­ly are cor­rect. They’re not only look­ing deep­er into data, but they want to do it on a more fre­quent basis,” says Mike Kel­ly, insur­ance sec­tor lead at AutoRek, a lead­ing provider of finan­cial, oper­a­tional and reg­u­la­to­ry report­ing soft­ware.

In a recent con­ver­sa­tion Mr Kel­ly had with a large insur­ance inter­me­di­ary, he found that they were hav­ing more reg­u­lar audits. The firm was sim­ply unable to per­form audits on a reg­u­lar basis, due to the huge data and oper­a­tional chal­lenges, as all data was rec­on­ciled man­u­al­ly and all reports were cre­at­ed on Excel.

“It’s just not the right type of envi­ron­ment to be han­dling such a large and detailed amount of data, espe­cial­ly as the lev­el of audit scruti­ny grows,” says Mr Kel­ly. Long-estab­lished insur­ers that are lum­bered with lega­cy sys­tems are par­tic­u­lar­ly at risk of fac­ing dif­fi­cul­ties in meet­ing reg­u­la­to­ry require­ments, as they have been hes­i­tant in embrac­ing new dig­i­tal tech­nolo­gies, and many still use paper con­tracts and remit­tance advices to doc­u­ment their busi­ness.

The work need­ed to digi­tise data can be time con­sum­ing and human error dur­ing this process can open up insur­ers to con­sid­er­able fines for non-com­pli­ance, espe­cial­ly around GDPR breach­es. One of AutoRek’s clients, a large Lloyd’s insur­er, had grown by acqui­si­tion and through the launch of a range of prod­ucts, which had cre­at­ed a patch­work of sys­tems with lit­tle abil­i­ty to rec­on­cile about 30 years of pol­i­cy data cor­rect­ly.

“They couldn’t even attempt to rec­on­cile because the data was in such a poor con­di­tion. We are work­ing on rec­on­cil­ing poten­tial­ly hun­dreds of thou­sands of poli­cies and uncov­er­ing errors to ensure that our client can not just show to the reg­u­la­tor the data is accu­rate, but actu­al­ly explain and prove the process,” says Mr Kel­ly.

Insur­ers can then use the result­ing infor­ma­tion to bet­ter run their busi­ness, as they are well posi­tioned to price risk and make deci­sions on which mar­kets are the most prof­itable because the data is far more reli­able. The imple­men­ta­tion of AutoRek pro­vides a con­sis­tent approach to apply the rec­on­cil­i­a­tion frame­work across the busi­ness, and help deliv­er finan­cial con­trol, robust gov­er­nance, data trans­paren­cy and gran­u­lar­i­ty.

“AutoRek is an estab­lished soft­ware brand that is high­ly spe­cialised with inno­v­a­tive devel­op­ment and high­ly expe­ri­enced deliv­ery teams at its heart. We are con­tin­u­al­ly devel­op­ing our soft­ware by invest­ing in and incor­po­rat­ing inno­va­tions such as machine-learn­ing, arti­fi­cial intel­li­gence and blockchain, all to make sure the solu­tions we offer bet­ter equip our clients to meet reg­u­la­tions,” says Mr Kel­ly.

When any errors or dis­crep­an­cies are dis­cov­ered, they can be addressed in real time and reme­died ear­ly in the account­ing cycle. As AutoRek is a scal­able plat­form, the solu­tion can help future-proof insur­ers against ris­ing oper­a­tional costs and improve often tight mar­gins.

With effec­tive data man­age­ment becom­ing a key dif­fer­en­tia­tor for insur­ers in such a com­pet­i­tive mar­ket­place, the impor­tance of adopt­ing a com­pre­hen­sive plat­form that has the pow­er to resolve reg­u­la­to­ry issues will prove vital.

“To devel­op these solu­tions in-house would be pro­hib­i­tive­ly expen­sive for most insur­ers and find­ing the skilled staff to man­age the changes is becom­ing increas­ing­ly dif­fi­cult. This is our bread and but­ter, which is why a grow­ing num­ber of clients are look­ing for us to play a cen­tral role in their infra­struc­ture,” Mr Kel­ly con­cludes.

For more infor­ma­tion please vis­it autorek.com