The hard insurance market is here to stay. Worse, regulators are turning an increasingly critical eye to the industry in light of shifts in work patterns and risk.
The good news? The insurance industry is in the midst of a tech revolution to become more customer-centric, digitally empowered, and efficient. But first, you have to navigate insurance regulations successfully.
That’s where a claims consultant like Gallagher Bassett can help your company thrive.
Upcoming Focus Areas for Insurance Regulations
2020 was an unforgettable year––and not necessarily in a good way. 2021 has carried some of last year’s major changes into the new insurance environment, and in many ways, the regulatory environment of 2021 has been directly shaped by 2020, as seen in the regulatory focus areas:
- Digital transformation
- Workforce transformation
- Operational resilience
- Financial resilience
- Shifts in state regulation
- Climate risk
Workforce transformation, for example, is an obvious outgrowth of remote work trends arising from the COVID-19 pandemic. This also means that operational resilience has a different definition. Operational resilience now means building an infrastructure to account for remote teams, and remote teams, in turn, introduce different risks that insurers must account for.
Then there’s the practical side—48% of insurance executives pointed to the pandemic as evidence that they were woefully unprepared to weather economic storms, while only 25% agreed that they had a clear action plan for financial resilience.
Here’s the thing: As an insurer, you know that the field isn’t static. The policyholder experience is significantly shaped by what happens in the world and what the field focuses on. But one way or another, your policyholders expect the same excellent experience.
Here are a few major focus areas for insurance regulations this year.
Thanks to the rising security challenges of the new work environment—especially as workers remain online via unsecured computers—data governance is increasingly prevalent for insurance regulators.
Data governance is simply a principled approach to managing the data lifecycle. It includes things like data management policies, but on a larger scale, it ensures that you treat data as an asset aligned with your organizational objectives. It’s your first line of defense for data compliance.
It should come as no surprise, then, that regulators are cracking down.
At a minimum, insurance companies are expected to demonstrate robust data governance policies. On a deeper level, though, you have to put those policies into action.
Monitoring Data Collection and Refreshing Data Inventories
As an insurer, you collect massive quantities of personal and confidential data on your customers in order to provide the best possible customer experience and coverage. The problem? If insurers don’t manage that collection as a complete lifecycle, the data is vulnerable.
This is the point where your data governance policies are put to use. Insurers need to inspect the complete lifecycle of their data, from cradle (initial collection) to grave (deletion). For example, you need to review points where third-party vendors can access your data.
Regulators also want to see insurers review data classification. For instance, if you have existing data classifications, part of your compliance process is a routine check to ensure your classifications are still useful and relevant and, as a consequence, are still being used.
Ensuring Operational and Financial Resilience
Unfortunately, while many companies may have thought they were prepared for the unexpected, COVID-19 proved them wrong. And in the meantime, operations continue to transform as insurance companies continue to rely on outside vendors to parse their data and provide cost-effective alternatives to infrastructure investment.
The problem is that COVID-19 proved how fragile many companies truly are. Companies must meet the rising compliance requirements, which were made in response to long-term work-from-home arrangements, and demonstrate resilience with increasingly robust compliance programs.
How Claims Consulting Helps You Navigate Insurance Sector Regulations
This brings us to the meeting place of claims consulting and insurance sector regulations.
Typically, companies outsource claims consulting for a few reasons. They want better business outcomes. They want cost-effective resourcing support. They want carrier expertise. They want high-quality claims performance. Maybe they want all of the above.
Either way, claims consulting is essential to navigating regulatory changes.
For one thing, the right claims consultation service allows far greater agility and versatility. They make it easy to adapt to changes in your organization and your larger industry over time. All you need to do is add or remove products and solutions that match your business needs. And since you no longer manage those services in-house, scaling services is that much easier.
For another, relying on professional consultation services gives you a partner in risk management, with a clearly (and contractually) articulated understanding of data governance expectations. The right partner is your strategic match, someone who approaches data handling and security using the same or similar best practices that you value.
They can also make your data governance lifecycle that much easier to manage, no matter how regulations may change. In fact, compliance is one of the main areas that insurance companies outsource.
The Professional Consultation Services You Need to Thrive
Claims management is the pass or fail litmus test for the whole insurance industry, and that includes insurance regulations.
So, if you need a partner that will help you overcome your biggest challenges and make strategic moves toward the future, Gallagher Bassett is here. We focus on outcomes and aim for the best possible result for you and your business. We can help you deliver on your promises to your customers, just like we’ve been doing for ours over the last 50 years. Get in touch today to learn how we can help your organization drive transformation.
Joseph Berrios has 30+ years of industry experience and is a Senior Vice President - Carrier Practice Client Services at GB. You can find him on LinkedIn.