Navigating regulation has become one of the defining challenges for insurers in today’s market, but it doesn’t have to be a burden. That was the message from a panel of experts at this year’s Insurtech Insights conference, moderated by Insurance DataLab co-founder Matt Scott.
Watch the full panel discussion
The session brought together a range of voices from across the industry, including John Levett, Head of Regulatory Affairs at the Lloyd’s Market Association; David Baker, former Group Chief Risk Officer at AXA UK and Ireland; Romain de Maud’huy, Global Head of Insurance at Oney; Matt Teumer, SVP, Insurance at Flywire; and Ashley O’Reilly, EMEA Head of Account Transformation at Corlytics.
The conversation opened with reflections on the volume and complexity of regulation and De Maud’huy reminded the audience that regulation itself is not the problem, but rather its coherence.
“I think only a guy with a chainsaw in the hands and a T shirt jumping in the air can say in the 21st century that the economy cannot be regulated,” he said. “But otherwise, I think everybody agrees that we need regulation. So it’s more the coherence of the regulation and the fact that we’re going in one direction.”
Baker added that the greatest risks emerge when there is a lack of understanding across the different aspects of the regulatory value chain.
“The risk increases when the regulator doesn’t understand the businesses that it’s regulating, or the businesses don’t understand what the regulator’s trying to achieve,” he explained.
To combat this, Levett said that compliance needs to be embedded into an organisation, starting at the very beginning of a process.
“Compliance is a line one activity,” Levett said. “It should be happening at the decision-making stage. When you’re doing that design, what you need to do is say, ‘This is how we came to this conclusion that this was the right thing to do at the time,’ and document it because at that stage, you know, it was a rational decision. That’s why you took it.
“And so it becomes part of a defensive position if the time comes that you have to have those difficult conversations with the regulator.”
The role of storytelling in regulatory engagement was a recurring theme for the panel, with Baker saying insurers needed to push their story in order to help regulators to better understand their business.
“We need to respect [regulators], but also not expect that much from them,” he said. “That means we then need to be proactive in the way we tell our stories about how we’re compliant, because we know our businesses better than they do. We know how we protect our customers better than they do.
“Firms that deal well with the regulatory risk, are very proactive in pushing at the regulator their story, and then sort of saying: Do you not believe me? If not, why? Rather than them coming and challenging with an unsubstantiated hypothesis.”
Technology’s Role in Lightening the Compliance Load
Technology, meanwhile, is emerging as an essential tool to ease the compliance burden and O’Reilly stressed the importance of moving beyond manual processes.
“It takes a lot of operational power in order to become compliant, and the larger a business, typically, the more people we have working on understanding, finding, analysing, and then being compliant with regulations,” she said. “So technology can help us in many ways. Often, there’s a workflow tool that we can use to support that which otherwise would just be a purely manual process.”
Levett reinforced the idea that insurers already have access to valuable data – they just need to use it more effectively.
“Quite often you do have the data. It’s just not in the right place or in the right system, or it’s in Excel sheets or something like that,” he said. “Now that’s still data. It just means that you need to be more creative in how you go about using it.
“With AI and things like that, you can take disparate data sets and then turn them into something that’s more coherent.”
For Teumer, the key to staying agile is proactive communication and building strong networks.
“There’s only so much you can read and learn online,” he said. “It comes down to relationships that you build and communicating proactively.”
Despite the challenges, Baker concluded by highlighting the strategic value of good compliance.
“Compliance and risk provide us a framework that enables us to balance the three key stakeholders that we all have to manage, which is our shareholders, our customers and our employees,” he said. “And as businesses, if we get that right, that we get that sweet spot – we’re sustainable and we grow and we survive.”
At Insurance DataLab, we see this strategic approach to compliance as a hallmark of the most resilient and innovative insurers. That’s why we work closely with our partners to deliver detailed insights and intelligence that support better decision-making and help ease the compliance burden.
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