I was chatting to some Lloyd’s underwriters last night & they mentioned the complexity of the Australian regulatory landscape for general insurance.
I agree that the landscape is complex however, I also made the point, of how a systematic approach to compliance enables that complexity to be adequately managed.
𝘼 𝙨𝙮𝙨𝙩𝙚𝙢𝙖𝙩𝙞𝙘 𝙖𝙥𝙥𝙧𝙤𝙖𝙘𝙝 𝙩𝙤 𝘾𝙤𝙢𝙥𝙡𝙞𝙖𝙣𝙘𝙚
- Identify the sources of your obligations. Obligations will arise from (i) what you do (& the licences & authorisations you need/hold); different obligations apply to insurers, Underwriting Agencies, brokers & TPAs & (ii) how you provide your services e.g., different distribution channels & use of claim service suppliers
- Record your material obligations. Larger firms may do this through a stand-alone register while smaller firms should incorporate it within their risk & compliance manual
- Adopt a risk appetite statement (RAS) position for regulatory/compliance risk.
- Assign key control(s) to each obligation until the obligation is within your RAS.
- Periodically test the control to ensure that it is designed effectively & operating effectively. Take action to close out any identified gaps
- Train your people (& ARs) on how compliance protects, the importance of a systemic approach to compliance & their role in control testing & self-reporting by promptly identifying & reporting incidents, breaches & complaints
- Use data generated by the systematic approach to compliance (incidents, breaches, complaints, self-reports, file reviews, QA etc) to validate the control test results & to report breaches to regulators or Code committees
- Use external information such as regulatory/Code reviews, ASIC letters, Court cases, regulator speeches & media releases & the like to question ‘could this happen to us?’ or ‘How are we managing this?’
- Report the control test results & data & external information to your risk & compliance committee. The data should be analysed, connections & insights provided & decisions made.
- Incorporate regulatory change mechanisms into your systematic approach.
- Use the data that the systematic approach generates as a continuous improvement mechanism so that compliance continues to protect & adds value to your business.
𝙂𝙚𝙣𝙚𝙧𝙖𝙡 𝙞𝙣𝙨𝙪𝙧𝙖𝙣𝙘𝙚 𝙞𝙨 𝙘𝙤𝙢𝙥𝙡𝙚𝙭
A systematic approach to compliance results in an ecosystem that continually evolves to respond to & manage the risks associated with business growth & regulatory change & increasing complexity.
The regulatory landscape for general insurance is complex. However, a systematic approach to compliance enables this complexity to be understood & managed in a way that protects your business, people, customers & stakeholders.