The question of whether technology is making compliance easier or not is not a simple one. One of Plato’s much quoted sayings is that “The only constant in the world is change”.
In the context of this article, I would like to bring evidence from both sides of the story. Technology is making it easier to be compliant with current legal and moral environmental risks, but conversely, technology is also changing what insurance professionals are expected to comply with.
The epitome of reasonableness
English legal scholar Percy Henry Winfield summarised the description of a reasonable man by observing that “he has not the courage of Achilles, the wisdom of Ulysses or the strength of Hercules, nor has he the prophetic vision of a clairvoyant. He will not anticipate folly in all its forms but he never puts out of consideration the teachings of experience and so will guard against negligence of others when experience shows such negligence to be common. He is a reasonable man but not a perfect citizen, nor a paragon of circumspection”.
Technology’s big influence
On the positive side we can ask how technology is making compliance easier. There are many ways that this can be demonstrated, so I will focus on a few of the main compliance issues facing insurers at the moment, and highlight the technology solutions that can address these:
- Client Needs Analysis (CNA) is a relatively simple guided process that ensures that insurance professionals understand a client’s financial and security needs. This can be scripted, recorded, and then interpreted by a number of administrations to put together a profile of the suggested options which can then be proposed to the client. The client can then make an informed decision on what to buy. The CNA also automatically generates the record of advice and is kept for record purposes.
- Workflows enforce business rules and thus compliance. With new dashboard style business intelligence tools, managers are able to rapidly monitor their compliance against service levels and business processes. These push technologies minimise the required technical knowledge of the manager and enable automated Key Performance Indicator (KPI) management of teams.
- Mobile Applications allow for a greater collection of information through enabled on-site data capture, combining sound, visual and location services thereby providing much more information than before. Accurate inventory systems can ensure that the client has the appropriate levels of cover and security features in place, while incident management applications can provide accurate information on speed, direction and behaviour prior to and during the incident.
The above solutions go a long way to address the obligations of ’know your client’, Treating Customers Fairly (TCF), and the Financial Advisory and Intermediary Services (FAIS) compliance.
The other side of the coin
On the negative side, in my 20 years of building and implementing insurance systems across multiple countries, one of the axioms I have come to understand is as technology advances, legislation and expectations will change to pose new challenges to insurers and their systems.
Technology has made the pricing and the management of risk vastly more competitive. Where price was previously determined on the back of a cigarette packet in a pub and a lot of thumb sucking, underwriters are now requesting a significant profile of the client and the associated risk before offering a rate. The amount of information available has enabled insurers to identify key indicators that could affect pricing and they have built complex algorithms to price their solutions accordingly.
Social media, company directories and other data sources provide technological solutions to determine the details of the client, but at the same time technology is making it much easier to create new and possible false legal persons through online company registrations and to identity spoofing.