Looking for a New Year’s resolution that will impact your insurance businesses’ bottom line and reduce operational risk?
All Lloyd’s agents undergo a continuous process of audit and inspection, the scope of which includes checking for efficient, compliant underwriting, customer interaction and data management systems.
And 2019 will be no different – except for the fact that there is huge potential for insurers to make significant efficiency savings in this area, and to reduce operational risk at the same time.
It is the job of internal audit to demonstrate that each department is applying risk controls correctly and effectively. That usually means interviewing people, manually gathering information from tactical systems and checking spreadsheets tally, all of which takes time and resource.
At the same time, unchecked errors in an insurer’s data can lead to misreporting, incur significant back office cost and present substantial hidden operating risk. Common errors and controls assessed by DQPro include:
- Breaches in underwriting controls or process relative to the jurisdiction of a risk e.g. missing or incorrect tax codes
- Custom compliance checks e.g. suspicious premium patterns associated with financial crime
- Data Quality checks e.g. Incorrect codes for catastrophe risks, such as flood versus hurricane – errors which lead to exposure reporting problems at Lloyd’s and directly impact reinsurance purchasing.
- Reconciliation controls e.g. ensuring the correct FX rate is used across multiple policy systems.
As well as allowing carriers to deploy their own flexible control set to automate detection and assignment of such critical errors, DQPro saves our internal audit customers valuable time. And we’re not just talking about half an hour here and there:
- Currently business units typically enter and monitor their own controls manually;
- One leading specialty insurer found it took up to three weeks to prepare evidence for their annual internal data audit;
- Using DQPro this was reduced to just 30 minutes. When controls are run and issues are addressed daily, the information is gathered automatically and available for review.
As the London Market Target Operating Model (LMTOM) moves forwards, data integration is moving higher on the agenda – the aim is for the market to share information seamlessly by using the same language.
A key LM TOM target is to provide better data, and make London an easier place to do business. In order to meet this target, insurers must have confidence in the systems that they have in place to apply controls and audit their data. Having a tool like DQPro in the armoury dramatically reduces the basic operational risks insurers face when handling data, as well as saving time, energy and costs.
More than just the next year
So if you do one thing for your business this year make it a data detox – being proactive and getting basic data monitoring and controls in place that integrates with daily business may well head off serious, unforeseen challenges as the year develops. This 2019 resolution could result in cost and operational benefits that last far longer than 12 months.