Historically, meeting regulatory requirements was a people-intensive effort. Compliance reporting was not part of a financial system’s fixed code block, so companies had to “throw bodies at the problem,” so to speak, to manage numerous ledgers and consolidate data into spreadsheets.
But using brute force for ad-hoc reporting isn’t sustainable, especially given that one of the most significant shifts in regulatory reporting is on the horizon: International Financial Reporting Standards (IFRS) 17, which goes into effect in 2021. Insurance in the U.S. is regulated at the state level, but IFRS 17 establishes a worldwide accounting standard that facilitates apples-to-apples comparisons of global insurance companies’ financial statements, increases transparency of policy profitability, and reduces incorrect valuations.
It’s one reason why addressing regulatory compliance is a top priority for 40 percent of respondents in the Forrester report cited above. “Product innovations delight customers and capture behavioral data — and catch the eyes of regulators who can deadlock new revenue generators,” the report says.
The fixed code block typical in a legacy system limits the ability to easily meet regulatory hurdles. Instead, companies need a back office system that can capture data ahead of looming and ever-evolving regulations. Consider Shelter Insurance: to get insights into day-to-day events like expenses and transactions, the company leverages additional dimensionality to reshuffle hierarchies and reporting elements. Carriers can leverage this functionality to adapt to new regulations and prepare for future and uncertain regulatory requirements.
Insurers are more than willing to help others minimize risk, but when it comes to mitigating a rapidly changing landscape, how can they maximize their own ability in handling uncertainty with confidence?
That’s why investing in the back office should take the front seat. Established insurance companies have heavily invested in technology upgrades to customer touchpoints, and it’s time to apply that same rigor to upgrading backend systems. Real-time data and agility will make all the difference in responding to current and future challenges shaping the industry.