Insurance regulations are becoming more complex. Are you keeping up?
July 22, 2016 | Lisa Benoit, Workiva
At the beginning of the year, I spent some time looking at predictions about what lies ahead for the insurance industry and the trends that are likely to make an impact. One thing stood out: the increasing burden of regulatory requirements.
Now that we’re at the midway point in 2016, insurance regulations have proven to be more important than ever. Amid a season of political uncertainty and pending updates on capital standards, there's no doubt that the insurance industry is in a state of flux.
But what does this mean for you and your business? Having spent many years in external statutory reporting, I’ve learned that a company’s ability to react quickly to changes in regulations is closely connected to two key areas.
- Whether it can attract and retain quality talent
- Whether it has the technology required to keep pace
Let’s take a closer look at each concern.
The talent shortage is already upon us
It’s no secret—the workforce in the insurance industry is aging. The U.S. Bureau of Labor Statistics reports that the number of insurance professionals age 55 and over has increased 74 percent in the last 10 years. And by 2018, 25 percent of insurance industry employees will be within 5 to 10 years of retirement.
It’s no wonder that new recruits view the industry as stagnant, making it difficult to attract talent with a fresh mindset. But that mindset is crucial to continued growth and competitive advantage. To meet the challenges of the future—and attract bright minds and creative ideas—insurance companies must evolve.
By reframing their images and embracing innovation across the board, companies can position themselves as forward-thinking and technologically savvy. Being open to change is the first step toward providing an atmosphere where talented people with drive, ambition, and energy can thrive. In my personal experience, working in a diverse environment where younger and more seasoned professionals can learn from each other is highly rewarding. Why wait?
Legacy systems can quickly become a liability
Technology evolves so rapidly that it can be hard to keep up. But trying to make do with outdated legacy systems isn’t a smart strategy. Here’s why.
- They’re expensive and difficult to maintain and update
- They weren’t built to provide quick access to large amounts of data
- They can’t meet modern demands, causing many professionals to resort to other tools just to get their jobs done
Reporting requirements are nothing if not complex—and are growing more so every year. Keeping up with Own Risk and Solvency Assessment (ORSA), principle-based reserving, capital standards, and model risk management, along with technology concerns, like cybersecurity and privacy, is nearly impossible on older systems.
Outdated technology comes with a high price tag
A statutory reporting team at a well-known insurance firm estimates that it spent up to 250 hours per year on just formatting reports in legacy systems. Additionally, the director spent another 70 hours per year reviewing documents. The cost, both in employee hours and potential errors, is enormous.
External change requires internal change
In my previous life as a Workiva customer, I can attest to how Wdesk transformed the way I worked. Statutory reporting is complicated and time-consuming, but Wdesk helped streamline manual processes and improve accuracy across the board. It provided a huge improvement over cumbersome legacy systems, bringing reports and data together so that my team could spend more time on analysis and less time preparing documents.
If you’re looking at updating your systems to better meet regulatory demands, be sure to look for a solution that lets you:
- Improve the reporting process with smart automation and real-time collaboration tools
- Stay up-to-date with new or changing regulations
- Keep internal controls in check
- Ensure that all information is accurate and current
By choosing the right solution, you’ll be able to adapt far more easily as things change—even insurance regulations. It will also help you attract the type of new talent you need to stay ahead.
In my book, that’s a win-win.
This column first appeared on the Workiva blog.