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Coming into compliance: increased regulatory requirements have more carriers turning to automated solutions to handle compliance tasks.

With increased regulatory requirements and more scrutiny expected to come in light of the economic downturn, it's no wonder compliance and regulatory-driven business issues are causing some sleepless nights for insurance professionals.

Added to that, budgets are set to decrease and current automation isn't positioned effectively to respond, according to Celent's U.S. Insurance Compliance Survey 2009: Doing More With Less.

The survey of more than 200 insurance compliance professionals found current satisfaction with existing compliance technology tools ranks just "good" to "fair," and solutions being used tend to lack integration and consistency.

The result? Higher costs and lower quality of service.

"Many carriers still rely on shared file folders on common network drives," said Mike Fitzgerald, senior analyst for Celent's insurance group and author of the report. "Increased amounts of data and different systems doing different functions have carriers looking for something to bring that all together."

That's creating big opportunities for vendors.

"There's an opportunity for low-cost, integrated database framework solutions that can be used in the compliance area," Fitzgerald said. "Vendors that already serve the policy administration and product development space can improve compliance technology by extending functionality that already exists to these areas. For example, some solutions include work flow management that controls the building and maintaining of new insurance products (forms, rates, rules). Such tools can also be used to manage the filing process."

Also, vendors have existing services, such as business-process consulting services and system integration, "that can easily be applied to modernize and streamline compliance activities," he added.

Best's Review took a closer look at several compliance tools being used in the industry today.

Compliance Workspace Compliance 360, Alpharetta, Ga.

The Compliance 360 suite of GRC applications helps carriers manage increased regulatory requirements and oversight and create an "audit ready" state for their organizations, said President and Chief Executive Officer Steve McGraw. The solution is used to gather laws and regulations into a central, active content repository called the Compliance Workspace. As laws and regulations change, the system generates automated alerts to ensure that appropriate individuals are kept abreast of the latest updates.

Upon receiving notifications of change, Compliance 360 enables automated assessments to identify the extent of gaps in compliance and subsequent risks. Subsequent updates to policies and procedures are fully managed within Compliance 360, using automated work flow and version control to streamline the process, provide central management, monitoring and audit trails of all individual actions.

"Carriers are beginning to consolidate their compliance activities, across various regulated entities and regulatory lines, into one system of record," said McGraw. Some are also moving to cloud computing. "By accessing their applications over the Web, insurance carriers can now interconnect things that they couldn't before."


One Compliance 360 client not only eliminated state sanctions for late filings of reports and achieved total completion of code-of-conduct attestations with more than 3,000 employees in just six weeks, but also reduced time spent managing policies and procedures by 95%, cut time to manage corrective action plans by 70% and reduced the amount of time preparing annual regulatory reports by three-fourths.

Governance, Risk and Compliance Platform BWise, The Netherlands

Mounting regulatory requirements have carriers searching for an integrated approach to establish strong governance through solid risk management and demonstrated compliance. Technology can help.

"It's difficult to move away from spreadsheets and Web-based questionnaires to get that information without an automated solution," said BWise Founder and Chief Technology Officer Luc Brandts.

BWise's Governance, Risk and Compliance platform helps carriers capture their regulatory requirements, key risks and main processes. "And we provide the technology to collect evidence, provide reports and streamline the compliance program," he said.

BWise Compliance Management, part of the integrated platform, is a Web-based solution that supports all compliance issues. It maps possible omissions or compliance issues and then performs a noncompliance risk analysis to inform companies about their impending compliance risks.

Brandts said that while other control-based solutions require carriers to "check tons of boxes to say they've met requirements, we're organizing the process. At the end of the day, companies by definition are compliant because the design of the process looks at risk and requirements from a compliance point of view. We understand not all companies are ready to immediately implement in a big way, so we apply a 'think big, start small' approach to allow them to implement that big vision of all integrated and risk initiatives into one."


He said more carriers are migrating to the platform approach. "The investment is more easily justified, and the return on investment and business benefits is much larger." Also, BWise clients are seeing reduced audit and compliance costs, and "improved profitability because of the more streamlined process."

Coverage Verifier Suite/CV-ALIR and CV-Exchange ISO, Jersey City, N.J.

Several years ago, ISO unveiled its Coverage Verifier Suite as a service from its A-PLUS unit that provides personal auto and homeowners insurers with policy-level information needed to make better risk-selection and pricing decisions.

It recently added several features to help with compliance-related functions.

"There's more demand for immediate information with the ubiquity of the Internet and the ability to exchange information among trading partners cheaply, quickly and securely," said Jim Levendusky, product manager for the Coverage Verifier Suite. Auto carriers, which are required to report to departments of motor vehicles, "in the past ran batch processes weekly, monthly or quarterly. Now states are requiring information be sent File Transfer Protocol daffy or weekly, and more states are rolling out Web services for real-time information."

ISO's CV-ALIR subscription service helps satisfy companies' regulatory obligations to report automobile coverage to state DMVs. With CV-Exchange, companies can manage loss payee and mortgagee notifications, producer notifications and escrow billing.


"Both services are supported by the Coverage Verifier Database, a participatory database of carriers' policy information," Levendusky said. "That provides us a mirror image of key fields of their policy management systems."

He added, "Our data format is simple and doesn't vary from state to state. We use our applications and expertise for the information, interpret it and decide, based on each TPA requirement, what information they need, when they need it and that it gets to the right place at the right time."

Insurance Certificate Tracking RiskTrax Software LLC, Park City, Utah

The insurance industry is starting to move away from centralized systems to Web-based, decentralized models that allow people to access their tracking software from any environment, said Dave Stevens, vice president of operations for RiskTrax.


That's why the company developed its Insurance Certificate Tracking software--to keep carriers informed if certificates of insurance from vendors, subcontractors or strategic business partners are current, and to help them comply with their established risk-management and insurance requirements.

"Previously, [carriers] had one mainframe or network. Now they can use their PDA, iPhone, Android or other device with a Web browser to be interconnected," he said.

The system tracks ACORD forms, coverage amounts, coverage expiration dates, additional insured language, loss payee and additional payee clauses and insurance carriers' financial strength and stability. It also can generate letters automatically, such as requests for certificates, renewal notifications, cancellation notifications and noncompliance certificates.

"We can help someone with no experience turn on the machine, use what's on the screen and have them up and running in 30 minutes, using a Web-based application," he said.

One of Insurance Certificate Tracking's newest features is an alert function that signals to end-users if certificates are about to expire. "That allows them to talk within themselves, like an IM application."

Stevens said users see immediate savings "because they have things in their drawer and on spreadsheets and we're able to cut down the time they're spending on that by 20%."

NILS INcompass

Wolters Kluwer Financial Services, Waltham, Mass.

Mounting volumes of documentation and states' unique languages to describe compliance concepts have carriers sifting through data to determine what applies to their business, and making necessary internal modifications such as system or procedural changes, said David Evans, vice president and general manager of Wolters Kluwer Financial Services' insurance compliance solutions business.


Carriers are looking for technology solutions to monitor their progress, rather than relying on spreadsheets and e-mail, he said.

Wolters Kluwer's NILS INcompass is a work flow tool that helps compliance and legal professionals monitor and implement regulatory changes within their insurance organizations. It allows users to monitor the organization's progress in applying new industry laws and regulations, and also provides details about these changes so they can determine how the regulations apply to their businesses.

Users also can run multistate and multibook searches simultaneously, Evans said.

NILS INcompass integrates with the company's NILS INsource, a Web-based regulatory research tool that allows insurance compliance professionals to leverage its insurance terminology indexing, line-of-business searching and compliance topic and subtopic categories to obtain focused, accurate context.

NILS INsource's market-conduct examination module for life and health insurers allows carriers to determine frequently cited regulatory requirements from past examinations in their own and other jurisdictions. The system's NAIC Model Laws module lets users access NAIC model laws, regulations and guidelines.

Key Points

* The Trend: Insurers are facing increased regulatory and compliance requirements.

* The Issue: Carriers have been slow to add automated technologies to help with compliance-related tasks and activities.

* What's to Come: Some vendors are using existing services to help automate that process.

Listen to an interview with Mike Fitzgerald at audio. Digital readers: Hold cursor over icon for content.
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Title Annotation:Technology
Author:Chordas, Lori
Publication:Best's Review
Geographic Code:1USA
Date:Dec 1, 2010
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