The list of insurance regulations governing the insurance sector reads like an alphabet soup: FATCA, KYC, CRS, AML/CFT, IFRS 17, IDD, GDPR, and a host of local laws and regulations that are turning regulatory compliance into a drawn-out uphill battle. To meet their obligations, life and non-life insurers across EMEA are investing a lot of time and effort into managing and defining their processes and data accordingly.
As their work was increasingly digitalized and manual tasks were replaced with software-powered automation, the idea of having compliance-related features included in the core system gained momentum.
And we, the Software makers listened. Nowadays, support for regulations has become a kind of basic requirement for insurance core systems. However, not all solutions were created equal when it comes to the breadth of support and intuitiveness of compliance functionalities for different insurance departments.
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As this list shows, regulatory compliance is a complex field that also places significant costs on companies. In addition to overloading your compliance team, it also carries large financial investments into software and manpower.
However, the costs of non-compliance are rising more quickly than the costs of compliance. A study by Ponemon InstitutS has shown that between 2011 and 2017, the cost for organizations that experience non-compliance problems rose to USD 14.82 million from USD 9.37 million. Just consider GDPR which can result in astronomical costs. For example, Amazon was fined EUR 746 million in 2021 and WhatsApp was slapped with EUR 225 million.
Let’s look at individual types of compliance.
The party compliance set of functionalities deals with reporting on the source of the financial assets which converge into insurance. AdInsure can be used to set FATCA (Foreign Account Tax Compliance Act) and CRS (Common Reporting Standard) statuses for a client and report on the flagged parties to relevant financial institutions which exchange the collected data and perform due diligence procedures. The aim of AML/CFT (Anti-Money Laundering/Combating the Financing of Terrorism) controls put in place is to prevent the use of the financial system for the purpose of money laundering and terrorist financing by reporting on the declared source of the funds. Finally, clients identified as politically exposed persons (PEP) are treated as a high risk across all insurance processes. AdInsure sends system notifications to users because of their higher risk of potential involvement in bribery and corruption.
As our very own Nikola Aleksić says, IFRS17 is one of the biggest and most significant insurance accounting changes to happen in our lifetime. It is much more than a simple accounting change, and as such, requires a comprehensive approach in terms of the analysis as well as the implementation. AdInsure’s configurability was waiting for just such an opportunity to prove itself and it has proven to be more than up to the challenge. It supports relevant configurations of business events as well as high granularity of posting schemas. You can find out more about the topic in the following blog post:
General Data Protection Regulation is structured around six principles:
Sure, insurance regulatory compliance efforts may seem like a costly but necessary proposition. However, compliance also brings several benefits. The 2019 Data Privacy Benchmark Study has shown that 42% of organizations agreed that privacy investments enabled greater agility and innovation, while 41% claimed they drove operational efficiency by organizing and cataloging their data. The same percentage of companies believed that they gained a competitive advantage over other organizations.
This data clearly shows that compliance initiatives are well worth it, especially if undertaken with the right IT support that streamlines the delivery of functionalities for compliance. AdInsure is the right solution for this, with full support for many global and local compliance requirements.