The “sales prevention unit” (also known as “the compliance department”) serves a vital role in insurance brokerage firms, even though every broker and agent hates to talk about it.
It’s there to keep your agency out of legal hot water. Regulatory agencies won’t hesitate to make sure a brokerage firm is following the letter of the law. The problem is, regulations are constantly changing and it’s difficult to keep up with them. And, depending on where you live, those changes come fast and fierce, leaving many brokerages in the dust.
The Geographical Factor
Insurance compliance regulations vary based on your location. This is one of the (many) reasons why smaller brokerages close after major regulatory changes. Take the EU, for example. The low interest rate environment has killed insurance company returns. They’re struggling to figure out where to invest money and those who don’t own subsidiaries, or where the subsidiaries are not well-diversified, face significant challenges.
In the U.S., the new Department Of Labor fiduciary rules just shook the life insurance industry to its knees with new rules and regulations regarding retirement accounts. Insurance agents who, for example, want to sell annuities inside of an IRA now have to show that it’s in the best interest of the consumer. Prior to the DoL ruling, agents were held to a “suitability standard”, which was different from a “fiduciary standard.” The new rules impose heaps of new paperwork and requirements on an already paperwork-heavy industry.
Technology’s Role in Solving Compliance Issues
Ultimately, the solution is to make sure your brokerage is using upgraded technology. Newer systems improve workflow and automation. And it’s not just a convenience thing, either. It’s a “let’s-avoid-an-E&O-claim” thing. If documents have to be shuffled back and forth between the brokerage and customers, there’s a higher probability that something will be overlooked. Maybe a missed signature, or even a misplaced decimal point.
Company-wide automation and centralized document management take care of a lot of these problems.
If a document can’t move beyond a certain point without all required signatures, it saves time, money, and potentially a legal hassle later. And, because everyone reads and uses the same documents from the same centralized location, everyone is “in the loop.” There are no excuses or reasons for non-compliance.
What’s more, filing product documents for compliance review and approval would also be much easier if there was an automated system linking the product development team to the insurer’s compliance and filing department.
Benefits of a Flexible Platform
A flexible, digital platform, like Novidea, solves many of the current problems in the insurance industry when it comes to compliance. Adopting an innovative dashboard architecture allows for better workflow management, and in turn, faster ways to adapt to any new regulatory laws that come your way.
A lot of the challenges facing insurance brokers are eliminated by virtue of the fact that the Novidea platform is “object structure”-driven. Meaning, policyholders, contacts, policies, claims information, and quotes (to name a few) are treated as “objects” in the system, which can be easily manipulated or combined on-screen in a number of ways.
Any new compliance and report requirements can be met by dragging and dropping “objects” to create or find a new report. No more manual sorting and organizing. No more tedious paperwork.
For example, under the EU’s Solvency II, insurance businesses are required to report the amount of capital they hold is enough to reduce the risk of insolvency. This entails sending in a long list of forms and reports such as:
- Statement of net assets
- Profit and loss account
- Analysis of net claims & premiums
- Analysis of premium claims & expenses, and more…
With Novidea’s flexible platform, you can easily drag and drop the relevant categories to automatically create each report, without sifting through piles of paperwork or trying to juggle communication between the various departments.
The Novidea platform also allows any new regulatory changes to be made on the backend without having to waste paper reprinting policies and disclosures.
Where To Go From Here
The tech you need to swiftly adapt to insurance industry compliance regulations is here. But, unfortunately, many smaller brokerages are ignoring it. Even larger agencies are still pretending it doesn't exist. Platforms like Novidea should be implemented by savvy brokers all over the world in order to effectively eliminate hours of manual reporting work and give them the competitive edge.
Fact of the matter is, the insurance industry is undergoing a digital revolution. Contact Novidea and upgrade your business today.