Compliance is a boring word, let’s be honest. But non-compliance can mean big fines from the ICO, FCA or the EU and don’t think that just because the UK is technically leaving the EU, that the future rules, laws and regulations regarding insurance marketing, sales and admin will not apply. Is there an easier way to navigate these Gordian knots of red tape you ask? Well maybe technology, particularly AI-powered software, can come to the rescue. Here’s the latest analysis from GlobalData;
Regtech is generating a lot of excitement and has become the new buzzword in the fintech space. Regtech is now making its way into insurance, promising the industry new ways to better understand where organizations may be at risk of non-compliance and offers tools to streamline processes and reporting. Insurers are gradually waking up to the benefits of regtech but its potential remains untapped, says GlobalData, a leading data and analytics company.
Beatriz Benito, Senior Insurance Analyst at GlobalData, said: “Regulation in the financial services space has expanded substantially since the outbreak of the global economic crisis of 2008. Equally, the cost of complying with such requirements has hiked. Organizations falling short of compliance also put their reputation at risk.”
Regtech in Insurance finds that the adoption of regtech solutions is gaining traction in an ever-evolving regulatory landscape. In fact, 2018 was the largest ever year of investment in regtech, with deals attracting $4.5bn globally and more than doubling in value over the course of the year. At the same time, the number of partnerships is increasing.
Benito continued: “Keeping pace with regulatory changes is proving to be extremely burdensome and time-consuming to financial institutions and insurers alike. In Europe, for instance, Solvency II was implemented to reduce the risk of insurance insolvency, but it has increased exponentially the reporting requirements imposed on the industry.
“Organizations are turning to regtech solutions to monitor regulatory compliance and automate reporting, as well as to enhance their data management capabilities and mitigate risks.”
The regulatory burden is not limited to insurance; it largely resonates in the wider financial services space. As per GlobalData’s 2018 UK IFA Survey, staying compliant with changing regulations is the greatest threat for financial services providers (IFAs) in the UK, with almost two thirds of respondents identifying this as their top concern. Uncertainty related to Brexit (which could ultimately lead to further regulatory changes) was the second most important challenge.