Addressing the stringent regulatory demands of the Financial Services Reform Act of 2001 (FSRA), a consortium of six Australian property and casualty insurance carriers have launched a compliance Internet hub.
Development of the hub concept was led by Allianz Australia in a collaborative effort with CGU, QBE Mercantile Mutual, NRMA, MTQ, GE Insurance and the Insurance Council of Australia (ICA). According to the ICA, the FSRA brings an unprecedented level of customer disclosure requirements and reporting to the Australian Securities and Investment Commission (ASIC).
To meet those requirements, insurance agents must disclose to their customers what products they are authorized to provide and any commission or incentives they are receiving from insurance companies.
Following the issue of an RFP in April 2003, the consortium of insurers contracted IBM (Armonk, N.Y.) and Axe Group (Sydney) in October to build an Internet hub in time for a March 2004 regulatory deadline. The jointly built service went online in January, serving about 10,000 insurance agencies and their agents Australia-wide. The system provides 24-hour, real-time information management of FSRA compliance data and automatic reporting to ASIC, and it allows agents to produce compliant Financial Services Guides, which detail the agents' relationships with insurers.
"The hub allows insurance agents easy access to their FSGs, eliminates duplication of effort across the insurance companies and agents, and reduces administrative processing costs by an estimated 50 percent," says Matthew Chee, Allianz Australia's group FSR project manager.
Initial build-out and project costs were paid by the six original consortium members, but ongoing costs for the hub's services are on a pay-per-use basis, according to Jason Sharman, a Sydney-based financial services executive with IBM. Sharman asserts that IBM won the contract through its ability to provide a solution that flexibly scaled with demand and adjusted itself to regular monthly peaks and troughs in the compliance cycle. "The insurance companies have the benefit of accessing the technology on a continual peak cross basis-we can simply turn on capacity without the ICA or companies needing to buy more as the workload increases," Sharman says. He notes that as more companies come on board, they will be charged a one-time service fee, to help defray initial costs.
Anthony O'Donnell has covered technology in the insurance industry since 2000, when he joined the editorial staff of Insurance & Technology. As an editor and reporter for I&T and the InformationWeek Financial Services of TechWeb he has written on all areas of information ... View Full Bio