In an industry as highly regulated as insurance, there’s a common perception that carriers (and many larger agencies and MGA/Us) are reluctant to incorporate new technology because of regulatory concerns. The rapid rise of insurtechs, most of which have focused on using technology to provide a better customer experience, may have put a dent in this monolithic opinion but it still persists… or so many think.
The publication of this year’s Thomson Reuters Regulatory Intelligence Report on FINTECH, REGTECH AND THE ROLE OF COMPLIANCE IN 2020, which surveyed almost 400 compliance and risk practitioners worldwide, contains data that throws some interesting light on the current prevailing opinion. As a cutting-edge tech vendor in the insurance space we thought the report was on point in a number of respects, which we’ll summarize here.
One of the leading conclusions was that respondents see concrete benefits in the advance of technology solutions in the next 12 months, with the top three benefits denoted as “a strengthening of operational efficiency, improved services for customers, and greater business opportunities.” On the flip side of that is the opinion that regulatory developments seem to be slow to keep up with the pace of new technology. This is fast becoming the new reality and many forward-looking companies in insurance could see distinct benefits from an early mover advantage.
Another key finding in the report was that the biggest challenge many companies expect to face in the next year has changed from prior year reports, with the top challenges in 2020 listed as “keeping up with technological advancements, budget limitations, and the lack of investment.” In prior years the challenges were listed as “the need to upgrade legacy systems and processes, lack of budget, and the lack of skilled resources.”” The report also specifically calls out opportunities for innovation in the areas of compliance and risk management, where keeping up with technological advances to stay competitive is not just desirable but a ‘must-have’.
That brings us to the point of this post – the general opinion on technology and its role in the industry. When this specific question is tracked over the last three years we actually see a relatively steady view on tech innovation and its role in the market, with the 2020 report noting that 83% of respondents expressed either a mostly or extremely positive view. When that question is honed on regtech (as opposed to the larger, overall scope of fintech) there’s also a steady and overall positive trend, with the 2020 report showing a 77% positive view (20% extremely positive, 57% mostly positive) of regtech technology and its impact on the market.
The rapid advance the industry’s increasing ‘technology first’ approach means the next regulatory challenge may not be met with an increase in headcount but a use in tech solutions to increase efficiency and performance at the individual contributor level, which ideally is what the promise of technology is about – for example, lowering the cost of compliance through automation and moving from reactive remediation towards proactive prevention. In this case the threat posed by upcoming insurtechs is driving the industry toward innovation at a much faster rate than in the past and mandating technology adoption as an integral part of company strategy.
Lastly, the closing section of the report had a trenchant note for solution providers – which immediately got our attention because it speaks directly to our overall company values. Quoting from the report: “Solutions need to be practical, providers need to be careful not to over promise and under deliver and above all developments should be aimed at genuine problems and not be solutions looking for a problem… For risk and compliance functions much of the benefit may come from the ability to automate rote processes with increasing accuracy and speed. Indeed, when 900 respondents to the 10th annual cost of compliance survey report were asked to look into their crystal balls and predict the biggest change for compliance in the next 10 years, the largest response was automation.”“
Honestly, as a purpose-built solution for insurance licensing and compliance we could have written that last paragraph as the guiding principles with which our company was founded. That – along with our meteoric growth – validates the AgentSync solution and our value in the industry, so book a demo with us.