Global regulations – writing the insurance rulebook
The uncertainty over Brexit brings into sharp focus the need for global P&C insurers to have flexible data monitoring and oversight that will help them quickly adapt in a changing global regulatory environment, writes Nick Mair, founder of Atticus DQPro.
Global regulations for the insurance industry are shifting – at any one time a P&C carrier will very likely be writing business in a jurisdiction that is reviewing or updating its insurance regulations.
And it’s not simple to keep up. Global regulatory uncertainty will likely remain a “significant and ongoing challenge” for insurers across the world, according to Deloitte’s 2018 Insurance Regulatory Outlook report.
“Both US and international insurers would be well-advised to stay on top of global regulatory developments and continuously assess the potential impact on their business models,” the report warns.
The Brexit clock is ticking
Take Brexit as one example – an issue that has been dominating headlines worldwide. Everyone hopes for a smooth Brexit transition, but the exact shape of the final agreement has not yet been finalised.
The clock is ticking for insurers to get their data checks in order – when the UK quits the EU on 29th March 2019, the way London market firms do business with Europe will change forever.
We’re seeing interest from globally operating carriers, MGAs and brokers, all similarly troubled by Brexit and the scale of the process and data challenges it presents. Because of the timescales involved, and the existing myriad of legacy systems that are often in use in insurance businesses – particularly multinational businesses – there is a need for technology that offers oversight of a firm’s existing architecture.
All insurers need oversight and confidence when it comes to business being written in Europe, whether routed through the new Lloyd’s subsidiary in Brussels or through a company’s own EU domicile.
Here’s what this means from a data perspective:
- London market insurers routing business through Brussels require new processes and checks to ensure compliance, e.g. for the correct stamp for risks from within the European Economic Area.
- Mistakes – including using the wrong stamp or tax codes – repeatedly unchecked across business classes could risk hefty fines by regulatory authorities.
- Insurers clearly need an agile, flexible monitoring and oversight that will help them quickly adapt to new rules and achieve contract certainty in an uncertain regulatory environment.
Increasingly, we are seeing demand from users of our technology for exactly this kind of regulatory tool kit – sets of rules that can be applied to monitor incoming and outgoing data, looking through the lens of a carrier, precisely with this vision in mind.
Crucially, these checks must be easy to adapt as the situation on the ground changes. They must be unique to each user, deployed for business-side users and developed specifically for their own processes.
DQPro’s growing Market Rules library already has at least 200+ different rules for various jurisdictions, with its own expanding Brexit subset, something we’re not aware that has been done before.
By setting a “validation standard” that all carriers can work towards, we’re setting a new bar for market data quality and a new set of rules fit for purpose. Ultimately this helps reduce operational risk, ensures consistency and gives executives the daily confidence they need to conduct business in what is currently a fast changing world.