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The growing role of the insurance compliance officer

Find out how technology has shifted the insurance compliance officer role and why they are more accountable and involved than ever before
John Sherman

When you think of a compliance officer in any industry, it’s easy to imagine someone ticking off boxes on a checklist as they make their way around the organization.

While this stereotype may still be the norm for many industries, the insurance compliance officer and those in other neighboring financial industries have recently seen a few changes to their role which makes them more accountable and involved than ever before.

Although relatively young when compared to other industries, the compliance officer in an insurance company still holds a vast amount of responsibility for the company. Changes in technology, in particular, have signaled a huge shift in how this role is to now be carried out.

Gone are the days when the compliance office would offer a simple tick on a piece of paper before moving onto the next point, as the changing needs in documentation, regulations, external influences, and other arising issues make this job more complicated than ever. However, with all of this responsibility, the insurance compliance officer role is also receiving more respect at the management table than ever before.

The Technological Revolution

Where once an insurance compliance officer might have access to a range of resources to complete their job, most of these are shifting towards technology based systems. The Accenture 2016 Compliance Risk Study interviewed more than 150 compliance professionals and found that 84% of their employers now relied on digital resources for their compliance.

This shift towards technology could also indicate a decrease in the physical role of the insurance compliance officer, where machines and computers may now be able to provide these checks directly with staff and cut out the middleman, effectively. Many companies which now use elearning can generally keep track of their staff’s completion of training and education which keeps their competencies up to date, further eliminating the need for a compliance officer to perform checks for themselves. 

A Greater Need For Documentation

With this movement towards technology comes a stronger need to document everything that an insurance company does. As the insurance industry is heavily regulated both internally and externally, it’s never been more important to have a clear and accurate record of a company’s activities.

By further using these digital systems, most insurance companies can keep track of every single process and procedure carried out within the organization so that senior management know exactly where possible risks may lie.

The National Association of Insurance Companies can at any time request data from a business, so the insurance compliance officer must know exactly where and how to gather this. The NAIC has even stated that any insurance company with more than $500million in direct premium must submit an Own Risk and Solvency Assessment each year to ensure everything is running above board. These new needs to report to external bodies has given the insurance compliance officer, even more, to be responsible for than before.

New Issues to Contend With

Along with the new reporting responsibilities, there are other issues that the insurance compliance officer must be aware of. Depending on who the compliance officer has to report to, they may find that communication needs to be more effective than ever to ensure that their findings and recommendations don’t become lost through the ranks.

According to a study, less than half of insurance companies have a dedicated compliance officer within the organization, however, this number seems to be increasing.

As the role is still being developed as such, an insurance compliance officer must be flexible and adaptable to grow with their position. This includes embracing any digital and technological processes that might become part of the role, as discussed earlier. Along with the processes and procedures that come with the role, the ever-changing regulations that govern the insurance industry also make this job particularly tricky.

Continually Changing Regulations

One thing that hasn’t changed within a compliance officer’s role is that the rules and regulations which govern the insurance industry continually transform. What has changed, though, is the amount of new regulations to be adhered to. Where traditionally most auditing and reporting was sent directly to management, there are now many external bodies that require this information too.

The compliance officer must stay on top of any advancements in the industry to ensure that their company is protected legally and financially, and this is where a digital training plan might come in handy. By implementing eLearning and other digital systems, insurance compliance officers can be guaranteed they are receiving the most up to date information relevant to their industry so that they can stay on top of the changing regulations.

What the Future Holds For the Insurance Compliance Officer

Although the role may be expanding and the scope of responsibility becoming even greater, the shift in this position isn’t without its reward. A study conducted by Accenture in their 2016 Compliance Risk Study has shown that the changing roles of compliance officers in insurance and other related industries mean that these positions are now able to influence higher levels of management than before.

Trends are indicating that insurance compliance officers in the future will come from backgrounds in other financial sectors so that they can have a greater understanding of every aspect of the role. This deeper knowledge will give them an even further respected position within the company.

As valued members of the management team, insurance compliance officers are able to give direct and fair input on where the company should be heading as determined by these many changing regulations and issues. This role can be particularly crucial in growing a business and keeping it competitive in such a volatile market as we will likely see in the future.

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