Evolving business models and the proliferation of innovative technologies are accelerating change within the insurance industry. While insurers recognise that they need to innovate, they are often hampered by the obligation to address ongoing regulatory challenges and associated compliance costs. However, insurers are beginning to look to new technologies for all areas of their business, including meeting these regulatory requirements.
With this new paradigm, insurance companies are looking to RegTech regulatory technology to incorporate compliance requirements in a more agile approach. For example, virtual agent technology could offer more compliant sales or advice from a pool of financial advisors and provide a better customer experience.
But how does this technology work? These are software applications focused on managing regulatory compliance. Firms invest in RegTech to save both time and money, allowing resources once devoted to compliance to be diverted elsewhere by incorporating RegTech. Its task is to summarise and analyse as much information as possible and understand more accurately what risks the company faces, all with a comprehensive database.
Key factors in the entry of RegTech
RegTech is gaining ground within the insurance industry due to a confluence of several factors:
Globalisation of regulation
Regulation is evolving very fast around the world, and many companies in the industry are taking advantage of this evolution to apply this technology.
Reduced reliance on external service providers
The automation of customer service and back-office processes performed by RegTech reduces reliance on low-cost outsourced service providers. This means that, in addition to offering a more consistent, brand-based customer experience, insurance companies can manage and reduce security risks and vulnerabilities arising from the use of third-party services.
Managing regulatory change with AI
Monitoring, understanding, and implementing the ever-increasing number of regulations that apply to insurance companies around the world is becoming increasingly challenging. As a result, there are a few RegTech solutions that use Artificial Intelligence for compliance, as the scale of new regulations being published overwhelms the ability of staff to keep up. AI solutions assimilate new regulation, distinguish whether it applies to an insurer’s specific products or services, and identify any regulatory gaps that exist currently.
The reality is that many RegTech solutions are versatile
They are well positioned to help insurers improve their regulatory compliance, while fine-tuning other components of business transformation for long-term success.
The benefits that RegTech offers insurance companies are undeniable. Not only do these technologies help streamline the business processes necessary to meet regulatory standards and lower associated costs, but they can also provide critical support for business growth, improve customer service delivery, and help accelerate speed to market. As a result, insurance companies that choose to use these technologies gain a competitive advantage in the future of the insurance industry.