Technology has gotten smarter in the past few years, making it easier for insurance companies to comply with changing regulatory requirements. Many billing systems, for example, now offer complete lifecycle automation of all billing for direct and agency transactions for all lines of business. That means establishing a concrete audit trail is easier, and production of documents and records for financial reporting is easier as well.
Further, with insurance companies tightening belts due to the economy, vendors are adding new functionality to systems to improve ROI. For example, the line between pure insurance accounting systems and portfolio management systems is blurring, with each taking on some characteristics of the other.
Many insurance companies have been almost overwhelmed in recent years by the sheer quantity of regulatory and financial reporting requirements. The response has been not only to increase staff, but to turn to a whole new category of technology solutions -- governance, risk and compliance (GRC) software. The emergence of GRC software solutions is a prime example of how the insurance industry is proactively dealing with compliance and financial reporting concerns.
There is no doubt that changes are coming in insurance regulation, and whether that occurs at a state or national level, insurance organizations will have to adapt and comply. Insurance companies of all sizes are going to have to make some changes when it comes to new financial practices and procedures. Whether we are talking about the establishment of an optional federal charter or principles-based reserving taking a stronger hold in the insurance industry, the answer is education. Insurance companies need to invest now in training for new and existing employees that will help them deal with changes when the time comes.