At the 2016 Insurance Regulatory Seminar held in Cape Town last week, Farzana Badat, Head of Insurance Compliance went to great lengths to illustrate the importance of “…reliable, dependable, quality data… to articulate conduct risks more precisely and makes compliance much easier to demonstrate.”
The Binder Regulations Thematic Review, conducted by the Insurance Division of the FSB during 2014 resulted in a report containing details of the specific findings from the thematic review, as well as an overview of the expectations of the FSB regarding the manner in which insurers are required to manage their binder relationships.
Information Letter 3 of 2014 was also published as a guide to the industry on how to use data to improve complaints handling.
Visits to a further seven insurers indicated that very little of the prescribed enhancements were effected.
Key findings
- Inconsistent understanding of “claims”, “claims ratio”, “repudiations”– leading to inconsistent and inaccurate reporting
- Absence of centralised repository for claims reporting – not all claims information being captured, including data from binder holders
- Lack of root cause analysis on common repudiation reasons – absence of evidence to demonstrate updates/improvements to policy wording, product design and customer processes
- Historical policy wording and claims forms not being consistently reviewed to ensure alignment with fairness principles
- Unnecessary documentation still being requested prior to processing of claims, based on “standardised” checklists that do not consider the nature of individual claims
- Increase in “voluntary” excess structures to drive down premiums and retain customers – leads to excessive out of pocket costs to policyholders
- Increased reliance on technology for fraud detection and repudiation of claims – without policyholder consent and absence of corroborative evidence
- “Hands-off” approach to claims that are dealt with by binder holders
“Having consistent access to the right data, in the desired format and at the right moment helps to generate new insights for better customer solutions and improved business efficiencies.”
To summarise: If you accumulate data for the sake of conforming to the directive of the FSB, and not to use such data to ensure better client outcomes in future, you are not doing what is required. Your actions should enable you to demonstrate the TCF outcomes of your actions.
Experience shows that there is some leniency at the outset when new regulations are implemented, but there will come a time when those who refuse to play ball will have to face the consequences.
Click here to download Ms Badat’s presentation.
