The financial sector has become increasingly challenging in recent times. Insurance professionals, like their equivalents in the financial sector, need to be on their toes to stay at par with changing Governance, Risk and Compliance – GRC challenges. Those included in compliance and governance capacities need to know this as an aspect of their responsibilities prerequisite. In any case, to perform effectively and to guarantee that the soul of the controls are not lost under the tedium and routine nature of required compliance, they have to welcome the theory behind the directions. They must also broaden their global knowledge and develop opinions to guarantee appropriate utilization of their insight to local realities.
Insurance companies are subject to a much higher level of scrutiny than ordinary trading companies. This is because customers pay premium before delivery of the final product/service, and government needs to protect their citizen’s money. Typically, they are subject to an additional body of law, and are monitored by government and independent regulators. The increased importance and scrutiny of compliance has made it imperative for insurance companies to effectively manage their problems.
GRC challenges in the Insurance Sector
Ongoing uncertainty in the macroeconomic environment, as well as future regulatory changes, will continue to challenge firms’ GRC management.
- Data Protection and Cyber Security – The availability of sophisticated hacking tools has significantly increased the risk of data breach. With increased focus on customer experience, the multitude of online interactions with customers and the need to protect, as well as analyze, the personal nature of data collected digitally, complicates cyber security. Insurance companies collect vital confidential information from their customers which they must keep safe.
- Global Governance – If the insurance company operates on a global level there is an increased focus on global coordination, global regulation and compliance issues that include systemic risks and dealing with capital standards. Several issues present at state/national level such as annuities, data breaches and cyber security will also occur globally. This calls for need to monitor the compliance from multiple locations.
- Increase and Changes in Regulations – There has been an increase in the number of compliance for insurance companies making it more difficult to duly adhere to all these compliance.
- Operational Risk – The operational risk includes actions taken by employees. These actions include indulgence in fraudulent activities by the employees. It also includes mistakes by employees which results in breaking of the law or non-compliance to the prescribed regulations.
- Annuities – Annuities are more complex than other insurance products, thereby increasing the chances for misrepresentation and misunderstandings. Insurers need to keep a close watch on their annuity in order to address the risk of misunderstanding & misrepresentation.
Regulatory scrutiny of the insurance industry has never been more acute. Government regulators constantly focus on making sure insurance companies have controls in place to avoid another financial meltdown. As the insurance industry takes on so many complex transformations a GRC (Governance, Risk & Compliance) solution is imperative to successfully meet the challenges listed above. This solution will help insurance companies enforce policies and regulations while also allowing it to take corrective action.Add to favorites