What Kinds of Regulatory Compliance Tech are on Insurers' Agenda?

Insurance companies are investing in technology to help them manage compliance -- but not all solutions are created equal.

Foresters, a multi-national insurance company, recently selected Compliance Assurance Corporation's (CAC's) Comply On Demand Enterprise (CODE,) a platform that CAC says helps insurers keep up-to-date and comply with changing insurance regulations. CAC CEO Jerry Shafran explains that the company's team of lawyers and paralegals processes and pushes out regulatory changes to client insurers.

Foresters' director of regulatory and business compliance, Laura Bullard, said in a statement that "a more streamlined regulatory change management process that mitigates enterprise – wide regulatory risk will allow us to continue our strong growth trajectory while supported by a sound compliance methodology."

CAC's Shafran on e-mail policy compliance

Clearly, regulatory compliance is a major concern of insurance companies. But what is the role of software in managing it? Novarica's Karlyn Carnahan notes that "the type of solutions carriers need depends on what issue they're talking about."

"There's product and price: are we selling the right products, are they the ones we filed, am I keeping up with the changes," she adds. "Then there's practice: am I doing the right practices consistently? The third issue is financial and regulatory reporting changes."

While CAC's product can help with any of those three issues, some are more specific. SAP released a program called Insurance Analyzer today, which it says "aims to help insurance companies seamlessly address the upcoming new accounting standards for insurance contracts (IFRS4) and the Solvency II standard model." Software that helps comply with those sorts of regulations is especially important to larger insurers, Carnahan says.

"If you're a global organization, you have Sarbanes-Oxley, IFRS, Solvency II, and ORSA -- all those require some sort of risk management in place, modeling for stress control," she says. "It's more about capital management and solvency assessment. So the challenge for carriers is first, do I know what I need to comply with, and second, can I capture the data that's needed to validate that I'm in compliance."

4 Key Insurance Issues the FIO Identifies

But insurers, by and large, are more focused on product and pricing compliance than financial and reporting, Carnahan says -- and the rising core systems replacement activity going on speaks to that as well.

"I wouldn't say that this is an area of hot activity. Insurers say compliance is an issue for them, but it's more about product, pricing, and process," she says. "And what you generally find is that the more modern the policy admin system is that they're using, the better they're in compliance."

This article contains reporting from Zarna Patel.

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