As they are pressed to make compliance a higher priority, C-suite executives in the insurance industry are being pulled in so many different directions that it is becoming increasingly difficult for them to gain a deep understanding of any one subject. They
need accurate, summarized and focused reporting to understand where they should focus and where risk lies.
This reality is evident in SunGard's new research report, The Regulatory Pressure Cooker. Significant majorities of senior executives surveyed at insurance firms - led by chief risk officers - said they are feeling highly or moderately stressed by regulatory
- Chief risk officer, 87%
- Chief executive officer, 85%
- Board member, 83%
- Chief financial officer, 82%
- General counsel, 78%
- Chief compliance officer, 76%
- Chief operating officer, 71%
- Chief investment officer, 70%
- Chief technology officer, 70%
The increased internal scrutiny of compliance strategy and regulatory readiness is a worthwhile development, even if the related stress is not welcome.
If C-suite executives don't understand the issues or the urgency and haven't bought into a vision, insurance firms won't see changes to their approach to compliance. However, once they have that visibility from the C-suite on down, it increases the importance
of compliance and shows everyone how it affects their day-to-day jobs.
Toward a Compliance Culture
That leads to a true culture of compliance. But it's not easy to get there. For example, 53% of insurance firms say regulatory change is prompting a widespread change in their organization's processes and culture, and 51% say it's a regular topic of discussion
at the board level.
At the same time, 45% say they are still struggling to move beyond a check-the-box approach to compliance.
Not only do you need support from the top, you also need a skilled compliance office that has the vision and ability to drive the implementation of that culture across the rest of the company. Relatedly, 73% of insurance firms plan to increase the size of their
leadership team over the next two years.
Spending and Technology
That's not the only area that will get additional resources over the next two years. Sixty-seven percent of insurance respondents say they will increase their compliance budgets by an average of 10%.
Nearly the same number of respondents - 68% - plan to increase the number of related staff, and 67% plan to increase their reliance on external specialists and advisers. A greater number - 72% - expect to spend more on technology.
It's no wonder that more than two-thirds of the insurance respondents will spend more on technology, staffing and external advisers. Compliance is not their core competency, and the rapid development of regulations around the world makes keeping up-to-date
difficult for even the largest firms.
Insurers now have to manage the data and processes needed to address regulatory challenges and mitigate risk from all areas of the business. Additionally, as global regulatory bodies evolve their rules and enforcement practices, they need solutions that not
only support the current myriad global regulations, but also can be modified quickly to meet new regulations.
When it comes to choosing software, insurance firms need solutions that can adapt to their unique requirements. They also need to make sure that processes and people take a flexible approach and don't get locked into rigid approaches and positions.
As firms evolve their compliance strategy to collaborate across the business, they are moving toward simplified workflows and automated solutions that are flexible enough to keep pace with changing regulatory demands and integrated to maintain a comprehensive
view of the business.