A positive compliance culture, one that truly embraces compliance, ensures that compliance serves its true purpose – to protect. If you begrudge compliance, it’s likely that you and your team see compliance as a bunch of rules that get in the way of doing business.
Choosing a safe vehicle to protect your loved ones.
When looking for a new or used car, you may consider buying one with some safety features. You may look for new cars that have a 5 star Australasian New Car Assessment Program (ANCAP) rating.
Vehicle safety features can significantly improve safety. Technologies like autonomous emergency braking (AEB), blind-spot monitoring and lane-support systems can reduce the risk of a crash. Side curtain airbags can reduce the severity of an injury if a crash cannot be avoided.
Going beyond this, we have a strict drivers licensing regime requiring knowledge and application of the road rules. Finally, we have a set of complicated road rules that govern road usage. In NSW alone these rules cover 353 clauses not including sub-clauses, amendments and regulations,
Notwithstanding the complexity & cost (& at times frustrations of fines & lost points) of the governance around the use of a motor vehicle, we accept it. Why? because we know that this system of governance protects people & the community that we care about . There is a connection between the head and the heart.
Compliance in general insurance is no different, compliance protects what matters. Compliance should not only engage your head, it should engage your heart. Protecting what matters, what you care about.
Compliance: protecting what matters
It is clear that compliance protects our customers and clients. However, it also protects our people, colleagues, your business, your partners and the wider community.
Compliance protects against the risk of non-compliance, such as:
Customers and clients: protecting against financial harm or detriment, anxiety, stress, mental health, frustration and time.
The business: protecting against financial impact, loss of licence, regulatory enforcement action, reputational impact, lost management time.
Your people and representatives: protecting against banning/disqualification, civil penalties, reputation, frustration, stress.
Your business partners: protecting against reputational impact, enhanced regulatory scrutiny, financial impact.
The community: protecting against systemic insurance industry failures, mistrust, failure to insure.
How does compliance protect in general insurance?
Imagine a fort: fortified protection through towers and walls designed to protect what matters. A fort provides safety to those within its walls.
Compliance protects what matters: customers/clients, the business and its people, partners, stakeholders and the community. How?
The four pillars (towers) of Compliance
Compliance must have an operating rhythm, producing data indicating the adequacy of your compliance measures, evolving as your business grows and responding to external & internal change. Compliance is an ecosystem continually protecting what matters.
The compliance operating rhythm is a structured, predictable way a business operates through its compliance measures incorporating:
- Governance & frameworks
- People & culture
- Procedures & process
- Systems & reporting
Layers of protection
Surrounding the fort are layers (walls) of protection.
- Compliance measures are your combination of policies, procedures, guidelines, IT systems, training, knowledge, experience, roles and responsibilities that together create a safe place to conduct business.
- Your People and representatives provide an early warning system. When something goes wrong with your compliance measures, an incident escapes seeking to cause as much harm and damage to your business and customers in the shortest time possible. Your people (trained to raise & report incidents), quickly identify and raise the incident, minimising the impact of any harm or damage. Similarily, your people and representatives are trained to identify & raise complaints quickly, with a view to resolving the customer complaint as soon as possible. Your people, by identifying and raising incidents and complaints, also serve as a continuous improvement mechanism for your compliance measures.
- The 3rd layer of protection is your Monitoring Program. A Monitoring program adopts a systematic approach to monitoring your compliance measures and people, representatives, distributors and service suppliers and enables compliance with AFSL, Code, FAR and CPS 230 obligations. Your Monitoring Program provides assurance on the effectiveness of your compliance measures to the board, senior management, business partners, regulators and Code governance committee.
- The final layer of protection is Culture. Put simply, a desire by everyone to do the right thing. This goes back to my initial question – do you and your people embrace or begrudge compliance?
Compliance workshop in Perth 14th August
I will be exploring Compliance – protecting what matters & engaging your people in the opening session at my in-person, full-day, General Insurance Compliance Workshop in Perth at the Rydges Hotel on 14th August.
Register for the Perth GI compliance workshop here
Compliance assistance
Contact me Paul Muir should you require assistance in setting up your Compliance measures so they protect what matters.
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