Meeting Insurance Regulations: Insurers Look to Other Industries for Infrastructure Strategies
In recent years, the insurance industry has been hit hard by new insurance regulations. The Health Information Portability and Accountability Act, the Sarbanes-Oxley Act and new market conduct examinations are just a few of the obstacles testing the mettle of insurance companies.
And these aren’t the only challenges facing the industry. Growing investor expectations, increasing customer demands and the rise of disruptors are all forcing insurance companies to innovate at a record pace.
New Insurance Regulations Need New Technology
To successfully comply with both current and future regulations, insurance companies must have efficient digital storage processes and networks that can handle accelerated processing speeds. Further, their infrastructure must be able to support new products, manage compliance requirements, monitor risk and report on investment performance. Without the appropriate systems in place, insurance companies will likely succumb to these challenges.
However, meeting infrastructure and technology requirements is easier said than done — more than a few insurance companies are stymied over how to overcome these obstacles. As such, they may benefit from looking at how other industries are meeting their own regulatory and infrastructure challenges. The following are some examples of how other industries are tackling many of the same issues:
Get Algorithms on Board Like Venture Capitalists
One proven way to master regulatory compliance and competitive innovation is to adopt a data-driven approach to decision-making. This approach should be implemented across the board — quite literally — including on the board of directors.
Advanced data analytics have proven beneficial in industries such as venture capitalism. Business Insider explains that Hong Kong-based venture capital fund Deep Knowledge Ventures actually made an algorithm a member of its board in 2014. The algorithm, called VITAL, is considered an independent decision-maker — VITAL reviews a prospective company’s financing, intellectual property and other funding and then votes on whether the company should invest.
While insurance companies may not be ready to go this far, they should be sure to implement an agile infrastructure that is able to support decision-makers at all levels with instant access to data and analytics.
Analyze Image and Video Data Like Scientists
Whether an insurance company specializes in health care, life or property/casualty, chances are that images and videos are a common element in their claim processing, regulatory compliance, lawsuits and new product development. As such, insurance firms may benefit from the ability to analyze massive amounts of data from images and videos.
Here, the industry can learn from various science disciplines that have mastered the art of sharing raw data internally and externally, moving image data to different file formats to speed up data retrieval and analysis and using images of data instead of the data itself.
Insurance companies that want to tap into these capabilities must first make sure their infrastructure is up to the job. Scientific journal Nature presents an overview of how scientists deal with both the volume of image data and the need for speed in analyzing it.
“We’ve spent probably about 40 percent of our time during the past five years simply investing in computational methods for data handling,” developmental biologist Philipp Keller, who works at the Howard Hughes Medical Institute, explained to the source.
Find Liabilities Like Lawyers
A good way to test organizational processes for compliance and legal resiliency is to follow the example of data-savvy attorneys. Lawyers often adopt their client’s perspective and parse data accordingly to build their cases. Insurance companies can adapt the same flexible perspective to mitigate risk and find product innovations.
For instance, instead of using analytics solely from the company’s perspective, insurance companies can run data queries and analytics from a customer’s point of view. Viewing situations from different perspectives makes it possible to discover new risks and opportunities.
By keeping an eye on other industries, insurance companies will be spared from having to reinvent the wheel. However, they must first be sure their infrastructure is ready to take on the new tasks these compliance models require.