Most insurers believe that their technology infrastructure is too sprawling and outdated in order to effectively manage risk, according to recent Wolters Kluwer research for its Regulatory and Risk Management Indicator report.
Thirty-seven percent of the 300 insurance organizations polled by the company said that their top obstacle to managing risk at the enterprise level was "Too many technology systems that are not integrated." That was by far the leader, eclipsing "Regulatory pressure" by 17%. A further 14% also cited "The lack of quality data, management, and analysis."
In addition, while the top risk reported overall was regulatory risk -- more than half of insurers selected it as one of their top risks -- IT risk was second, with a third of them doing so. In addition, Wolters Kluwer noted, the biggest insurers were more concerned with IT risks.
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"The challenges insurers face with technology is that most do not account for the unique complexities of managing regulatory risk for carriers," Steve Taylor, senior market manager of enterprise risk and compliance for Wolters Kluwer, told Insurance & Technology in an e-mail. "Since most solutions are created with an approach to meet as many needs as possible out of the box, they are often lacking when faced with the demanding and increasingly complex landscape of regulations for financial services companies. As the survey indicates, this is particularly evident when carriers attempt to retrieve data from disconnected systems in use in various parts of the business."
Insurers must put a governing structure in place so that they can use their data effectively to manage risk across the enterprise, Taylor adds. Currently, technology is too siloed, since it has often been deployed for specific purposes within the business rather than an overall enterprise view.
"The technology should function from a solid understanding of both carrier workflow and regulatory demands with an integration that allows carriers to effectively assess and manage risk with a central governing platform," Taylor says. "We believe what insurers need now, especially with ORSA looming, is technology that will provide a complete view of risk: A solution built on a foundation of regulatory and process expertise that provides needed transparency from regulatory requirement through to proof of compliance."
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Nathan Golia is senior editor of Insurance & Technology. He joined the publication in 2010 as associate editor and covers all aspects of the nexus between insurance and information technology, including mobility, distribution, core systems, customer interaction, and risk ... View Full Bio