Top concerns expressed in a recent survey surrounding the US insurance industry were for "new legislation/regulation and compliance". The survey was undertaken among senior US-based insurance executives on key industry issues and needs at the latest Insurance Accounting and Systems Association (IASA) conference. Results were announced by Sapiens International Corporation, which is represented in SA by JMR Software.
Other pressing issues identified by the respondents in the survey included "poor combined ratios" (17%) and "risk management because of potential terrorism" (11%). The survey also uncovered the information technology needs of the insurance industry, the most important being "communication between legacy systems" and then "integration". In addition, respondents indicated significant increases expected in the use of the Internet to communicate with customers.
The results of the survey reflect the reasons for anxiety among insurance executives in the US today. New market pressures point to the immediate need for scalable technology that can extend and evolve legacy systems to quickly meet the heightened demands on the US insurance industry. Furthermore, the growing global awareness of the need for more stringent regulation and compliance within the financial services sector was evident from the results of the survey.
Concerns raised in the US survey echo those of the local insurance sector, which faces the imminent promulgation of Financial Advisory and Intermediary Services (FAIS) Bill in SA. This will have far-reaching and possibly costly implications for South African financial services providers in their efforts to meets compliance regulations stipulated in the Act.
That`s according to Leon Theron, Sales and Marketing Director of software development house JMR Software.
The FAIS Bill aims to regulate the financial services industry, resulting in a more professional, accountable and responsible intermediary sector as well as better-informed purchasers of financial services. The Act stipulates that financial service providers need to be licensed, must keep records of their representatives and ensure that they are properly qualified and comply with the necessary codes of conduct.
Moreover, they are required to appoint a compliance officer and comply with stringent auditing, accounting and reporting requirements.
According to Theron, operating in this highly regulated environment will involve some overhaul of a company`s existing information systems, which are central to any successful compliance programme.
"For any financial service provider the costs of non compliance add up quickly - severe fines, bad publicity and the loss of new business income as a result of extensive retraining and restructuring programmes," Theron added.
JMR Software provides solution
JMR Software, together with Sapiens UK, has worked with life assurance companies and compliance specialists to develop a complete compliance monitoring software system, Compliance Extra.
Embracing all the activities in an organisation related to or impacting on compliance, Compliance Extra collects and analyses the necessary data to allow an organisation to monitor, manage and control activities which are subject to compliance regulations as well as anticipate where shortfalls may occur.
It can be customised to integrate with each organisation`s specific business processes and technical requirements. Its flexible design and structure enable it to evolve and develop as the organisation and its compliance needs evolve.
For any company facing the challenge of compliance, Compliance Extra offers a proven system that reduces the cost of maintaining compliancy through the automation of many manual, paper-based procedures. It allows for the control and management of multiple data sources, has powerful reporting capabilities and is readily Web-enabled for multi-branch organisations. It also gives early warning in the case of possible compliance breaches.
"In essence, Compliance Extra provides the financial institution the ability to enjoy sustainable compliance," Theron said.
"South African financial service providers - like their counterparts in the US, the UK and Australia - face huge and costly compliance challenges. While the Financial Services Board has yet to start enforcing the law, the cost of non-compliance will soon far outweigh the cost of compliance," Theron concluded.
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Established in 1987, JMR specialises in delivering turnkey custom-developed applications for mainframe, client server, Internet-based and wireless technologies, and has made major contributions in fields ranging from banking, transport, retail, chemical and pharmaceutical, to human resources and the insurance industry. The company has over 120 employees and contractors, which are deployed both in SA and the UK.