By Maria Wood
Considering the number of regulations insurance companies must obey and how often those regulations are revised, many firms have compliance procedures that are disorganized and insufficient, according to a recent survey by Compliance Assurance Corp. (CAC), a provider of regulatory compliance software.
The firm polled nearly 50 compliance executives working in the U.S. insurance business during its webinar series, “Managing the Hydra of Regulatory Change.” Overall, the survey indicates the “majority of current organizational processes for managing regulatory change are falling short,” concluded CAC.
Participants were asked to place their company’s compliance practices in one of five levels: ad hoc, fragmented, managed, integrated and intelligent. Each level indicates where the firm sits on the spectrum of compliance management and supervision.
A mere 10 percent of respondents identified their process as intelligent, the top level. In this classification, a business-process automation system facilitates robust oversight and management of regulatory changes, according to CAC.
About one-third (35 percent) graded their regulatory management system as managed, the mid-range on the scale. Though firms in this category exhibit some usage of technology
to manage the process and provide accountability, inconsistencies are evident. Although there is some visibility into regulatory change across the business, reporting tends to not go beyond the department level.
The results further showed that 28 percent classified their compliance processes as fragmented, meaning there is a consistent lack of structure, a lack of institutionalized systems for sharing regulatory information and a disjointed use of technology. This level further indicates there is limited oversight and accountability.
About 10 percent ranked their organization’s practices as ad hoc, or the lowest level of the regulatory change management spectrum. This level is marked by a lack of a defined regulatory taxonomy and low to no use of technology. Seventeen percent selected integrated, the second highest level, which is characterized by a common technology architecture enabling consistent management of regulatory change.
Jerry Shafran, CEO of CAC, noted in a statement detailing the survey’s results that in light of the fact that insurers are confronted with more than 3,500 state regulatory changes in a given year, the survey’s findings were “worrisome.” They also underscore the need for better regulatory oversight systems. “To reduce risk and remain competitive, insurance organizations are wise to evolve their execution of regulatory change management to a more effective and efficient process, one that is scalable and consistently meets the demands of business and regulatory environments,” said Shafran in a statement.
Originally published on LifeHealthPro.com