How digital risk and compliance have become integral to the insurance sector
Insurance is a sector that has been slower than most when it comes to digital transformation and the use of digital solutions to address traditional challenges and introduce new products and services. With methods and processes established decades ago, there is a conservatism that pervades across much of the insurance industry, and it has also been held up by legacy technology that makes digitisation much harder than is desirable.
But market forces over the past five years have combined to make addressing digital transformation more urgent and a key priority for insurers. To respond to these market forces, digital risk and compliance is going to be essential for the insurance industry.
Changing market landscape
Part of the need for change in insurance has been brought about by changing consumer expectations, who want smoother and slicker interactions with their provider and cheaper premiums where possible. This has led to the emergence of new and more agile market entrants, with business models entirely based on digital platforms. These are capable of providing more innovative and consumer-friendly services and pose a genuine threat to traditional insurers.
There is also the possibility of internet giants such as Amazon or Google entering the insurance and wider FS market. This has been something much discussed, and if it could happen, few would bet against such a move proving hugely popular with end-users. Such companies are focused on providing first-class customer service and have a powerful brand already deployed in many sectors.
Finally, there is also the fact that insurers are facing more regulation and compliance requirements than ever before. This includes more general data legislation such GDPR as well as specific regulation relating to insurance and FS. Non-compliance with this regulation would be disastrous for any insurer and has highlighted major flaws in many insurance company’s governance and compliance functions.
The arrival of GDPR in May 2018 has coincided with a time in which insurers hold more data on their customers than ever. The use of telematics in motor insurance, rise of wearable tech in health insurance, and smart appliances and IoT devices for home insurance, mean that data is everywhere and is generated on an on-going basis.
All this data must comply with GDPR and it’s important to know that all fresh data coming into an insurance firm must now also comply. If it doesn’t then insurers could face a major fine or perhaps more harmfully, suffer the kind of brand damage that will takes years to recover from, as an organisation that does not take sufficient care with its customer’s data.
Digital and continuous compliance software
To manage the risk of non-compliance, the most effective approach is to use digital GRC tools. Oxial works with FS companies all over the world on such projects, using its automation technology alongside the input of expert consultants and partners to ensure compliance is addressed.
Given the on-going nature of modern compliance for insurance companies, it stands to reason that an on-going and continuous approach is required to address it. The only way of achieving this is via a digital platform. This ensures that compliance is achieved for every piece of regulation that requires it, providing insurers with the peace of mind that they aren’t going to be hit with a major fine for non-compliance.
As well as addressing specific compliance requirements, such a digital approach also provides a solid platform for any insurer embarking on a wider digital transformation project. Compliance is such an important factor for the insurance industry in 2019, that utilising digital solutions for this will provide a springboard for digitisation in other areas.
If you are interested in learning more about Oxial and how we can help address compliance in insurance firms, please get in touch with us here.