Modern Insurance Magazine Issue 62

INSURTECH
Consumer Duty:
How Technology
Helps Compliance
It’s official: the Financial Conduct Authority (FCA) has
now announced the rollout of its new Consumer Duty
regulations from 31st July 2023. This is perhaps the most
significant change to insurance industry regulations for
over 20 years.
Tim Hardcastle,
CEO and Co-Founder at INSTANDA
It’s clear that these changes will
have a seismic impact on insurance
professionals, stakeholders, and
customers. With that in mind, what can
the enterprises within the insurance
industry do to ensure they can adapt
to new regulatory changes, anticipate
further reform down the line, and put
consumers first without affecting
revenue targets?
This article will discuss how insurers
can prepare themselves for compliance
issues, why being proactive is the best
course of action, and how no-code
technology and core platforms can help
insurers to future-proof their businesses.
The Implications of the new
Consumer Duty
What does the new Consumer Duty
mean for all of us? In brief, these
regulations are designed to ensure that
insurance products are fit for purpose
throughout the customer lifecycle.
Insurers now have to work harder
to understand their customers. To
comply with the new regulations, they
must continually assess whether their
products provide value for money and
remain suitable for customers. If not,
they’ll need to carry out more product
testing in order to remain aligned with
changing demands.
The FCA estimates that implementation
costs to the industry could be as high
as £2.4bn. Insurance firms need to
assess governance, revise their customer
service, and develop new systems
and processes. Continually reviewing
product suitability means that insurance
carriers must maintain ongoing
communications with customers at all
stages of the customer lifecycle; from
quote and apply, to inception, renewal,
cancellation, or claim.
Furthermore, insurers will also be forced
to create and release more products
than ever before to ensure that every
possible and potential customer need
is catered for. This rapid acceleration
of the time-to-market is obviously
a clear concern for insurance firms,
particularly those who are reliant on slow
or outdated infrastructures and admin
systems.
The value of new tech
The impact of new regulatory
requirements like this one perfectly
emphasises the reason why technology
has a vital role to play in helping insurers
and MGAs to stay compliant.
The ability of businesses to meet and
exceed these expectations is fully
dependent upon the platforms they have
access to. Clearly, insurers cannot rely
on legacy technology if they want to
release more products at a faster rate,
whilst enabling open dialogue with their
customers to drive ongoing business
decisions. By using digital solutions
to build Minimal Viable Products
(MVPs), insurers will cut their product
development time from many, many
months to just a matter of weeks.
However, implementing the modern
technology needed to achieve these
results can prove to be a costly,
challenging, and time-consuming
process. Insurers may not have the
resources and expertise to code the
platform they need to remain compliant.
Additionally, outsourcing to a thirdparty
has its own pitfalls, as these
programmers are far too removed from
customer needs to fully understand the
intricacies of the insurance industry.
Fortunately, there’s another way - one
that grants insurers full control over the
development and implementation of
their tech. This also allows them to build
and integrate what they want, how they
want it, without writing a single line of
code.
How no-code digital platforms
can help you prepare
No-code solutions enable insurers to
build, test, and launch new products
quickly, while minimising the cost and
resources needed. These solutions are
designed to be simple and intuitive
to use, meaning that insurers can
use core digital systems to design
products quickly, test them out
in the marketplace, and store all
documentation in different portals -
all without fussing over the technical
details.
Plus, in line with the requirement
for increased communication with
customers, insurance firms can
configure which predefined questions
they want to ask consumers in the
customer portal. The newly integrated
platforms can even be used as a
communication channel to gather
customer feedback.
Finally, no-code solutions should be
able to flag when vulnerable customers
are identified, helping insurers to
understand whether they should be
purchasing particular products.
Why you need to act now
The FCA isn’t specifically telling
businesses how to put its new rules into
effect, and this is a key takeaway. It’s
imperative that insurers and MGAs take
the initiative and act now. By acting
early and demonstrating due diligence,
carriers have a much higher chance of
avoiding noncompliance penalties.
Plus, as we’ve discussed, taking steps
to adopt modern technology will
help insurers to get ahead of their
competitors and level up their platform
capabilities. By acting early, they can
offer a larger number of better-quality
products, and release them faster
than ever.
These new regulations don’t have to be
a cause for concern. Instead, see this as
your time to embrace the possibilities
of no-code platforms, alongside a
further key opportunity for business
development.
74 | MODERN INSURANCE