Embedding regulations: A short-term insurance trend in 2014
Whenever there is a crisis or a financial meltdown, like we saw in 2009, the first people to suffer are i nsurance policyholders. The protection of policyholders has thus become important to regulators and a series of regulations has been released to address their vulnerability.
The regulations range from customer-specific reforms, such as Treating Customers Fairly (TCF), Protection of Personal Information (PPI) to industry-specific regulations, such as Binder Regulations and Solvency Assessment Man
Our main strategic focus this year will be to embed these regulations in our business, prioritising the major ones such as TCF and Binder Regulations. Corporate culture is vital to ensure success in this regard. We need to further encourage a culture in our businesses – especially in the financial services industry – where employees understand and embrace regulatory and other types of change.
One of the most important regulations in 2014 will be TCF, which encourages the fair treatment of clients. This does not mean that every claim submitted has to be paid out but rather ensures a commitment to pay all legitimate claims promptly and fairly. All processes also have to be fair and transparent where the customer is concerned.
Mutual & Federal is largely an intermediated insurance business and will thus be affected by the implementation of Binder Regulations. They regulate the type of outsourcing activities undertaken. Regulators are incredibly concerned about fair party business. Although there are a lot of issues to negotiate with the regulator, we’re confident that we’re making progress.
The other pillar of the regulatory reforms is the SAM reform. This reform was drawn up to ensure that insurers have enough capital so that, even in a worst-case scenario, they should still be in a position to pay out and remain solvent.
Mutual & Federal is already some way ahead of the industry when it comes to capital adequacy and this has manifested in the company’s high credit rating. The company was lauded for a “very high claims paying ability” and received a stable outlook by leading rating agency, Global Credit Rating (GCR), in November 2013. It also maintained its AA+ rating in terms of its national scale claims paying ability.
Mutual & Federal is implementing various campaigns to embed a more focused and disciplined risk culture in our business.
An important aspect of our brand promise to our customers is to protect what is important to them. This includes the personal information that they provide to us, which we are entrusted to collect and use in a fair, responsible and secure manner.
To show our commitment to support regulatory changes, we are sponsoring a series of seminars titled ‘On the Regulatory Front’ at 10 venues across the country aimed at educating intermediaries in the financial services industry. Topics include discussions around ways the industry and brokers should navigate the implementation of regulations such as TCF, FAIS (Financial Advisory and Intermediary Services Act), Binder and PPI.
In summary, it’s not just about changing processes but also about changing attitudes. One cannot treat this as a compliance or risk f unction. While some regulations might seem like overkill, policyholders must not be compromised. This is important to grow a sustainable business; we protect the business by protecting policyholders.
Karen Miller Executive: Corporate & Niche