Insurers’ Focus on Market Conduct, Privacy and Filing Rules
Insurers’ Focus on Market Conduct, Privacy and Filing Rules
Market conduct exams topped the list of concerns among all respondents to Wolters Kluwer Financial Services’ new U.S. Insurance Regulatory and Risk Management Indicator. In the report (follows on page 18) just released, seventy-five percent of those surveyed indicated a significant level of concern with exams, while concern with privacy and data protection, electronic business transactions, changes to state rate and form filing requirements, and consumer complaint compliance increased as well.
The ability to maintain compliance with changing regulations was the number one overall concern U.S. insurers are losing sleep over at night, with sixty-two percent of respondents rating their level of concern as a 7 or higher. The ability to keep track of changing regulations and the ability to demonstrate to regulators that they were in compliance were also top worries for nearly sixty percent of respondents.
The Main Indicator score fell to 96 from its baseline of 100 established in Q4 2013. Concern overall remained steady, however each of the industry metrics used to calculate the Indicator declined, resulting in an overall slightly lower rating. The cyclical nature of state by state variations in enforcement action timing was a notable contributing factor driving the small decline, along with an uptick in confidence in the surveyed carriers’ ability to manage risk broadly across the organization.
Twenty eight percent of respondents indicated they have an adequate strategic enterprise risk management program in place at their organization. At the same time there was significant rise in respondents citing “regulatory pressures” and “too many technological systems that are not integrated” as top obstacles to managing risk at the organizational level. As the effective date for Own Risk Solvency Assessment requirements draws closer, the strategic enterprise risk management programs at these carriers are going to be tested. This survey data points to potential vulnerabilities in the risk management framework at these organizations.
The company’s insurance Indicator measures 10 critical factors to provide a regulatory and risk management “pain indicator.” Seven of these revolve around direct input from life, health and property and casualty insurers on their top compliance and risk management concerns and three of which are based on regulatory data the company compiles.
“The steady levels of concern illustrated by the Indicator data provides us with a look into the challenges to U.S. insurance carriers heading into to most active time of year for regulatory enforcement actions,” said Pam Ewing, general manager of Wolters Kluwer Financial Services’ Insurance Compliance Solutions. “Moreover, the indicator suggests that organizations face a very real challenge not only to stay abreast of rapid regulatory changes but in establishing processes and, importantly, in developing an understanding of the true risk picture.”
Regulatory & Risk Management Indicator | Wolters Kluwer
AN OVERVIEW
Wolters Kluwer Financial Services’ Insurance Regulatory and Risk Management Indicator measures 10 critical factors that help illustrate the overall level of regulatory and risk management pressures the U.S. insurance industry faces.
These factors include concern over their ability to track regulatory changes, comply with new and existing requirements, and prove compliance to federal regulators. The time and resources organizations have invested in compliance efforts was also measured.
Risk management factors measured include insurance carriers’ sense of how effectively they are managing overall institutional risks, the involvement, buy-in and ability of the executive team at managing risk, and the time and resources they have invested in these risk management efforts.
For the final three factors of the Indicator formula, Wolters Kluwer Financial Services measured and compared the number of affected citations, the number of new enforcement actions and penalties and the total dollar amount of federal regulatory fines levied.
What follows in this report are the results of the Indicator itself. Some sections of the survey are highlighted, including:
• Growing Compliance and Risk Management Concerns
• Top Concerns Related to New / Changing Regulatory Requirements
• Top Risks Organizations Face
• Managing Risk Effectively
To obtain the full data set used to compile the indicator, please contact us at WKFSCorporateCommu@wolterskluwer.com
Indicator Methodology
Wolters Kluwer Financial Services surveyed nearly 300 insurance organizations on their most pressing regulatory and risk management concerns in October 2013 and then surveyed approximately the same number again in January 2014. We used the resulting measurements along with the changes we monitored in the actual regulatory environment to develop the latest Indicator.
About Wolters Kluwer Financial Services
Wolters Kluwer Financial Services provides more than 15,000 customers worldwide with risk management, compliance, finance and audit solutions that help them successfully navigate regulatory complexity, optimize risk and financial performance, and manage data to support critical decisions. With more than 30 offices in 20 countries, prominent brands include: AppOne®, ARC Logics®, AuthenticWeb™, Bankers Systems, Capital Changes, CASH Suite™, FinArch, FRSGlobal, GainsKeeper®, NILS®, TeamMate®, Uniform Forms™, VMP® Mortgage Solutions and Wiz®. Wolters Kluwer Financial Services is part of Wolters Kluwer, a leading global information services and solutions provider with annual revenues of (2013) €3.6 billion ($4.7 billion) and approximately 19,000 employees worldwide.
