Specialty insurance is a global market underwriting complex insurance lines across multiple jurisdictions. Most specialty insurers operate a “hub and spokes” structure with a headquarters in London, Bermuda or US with branch offices at relevant country level. Each jurisdiction is subject to it’s own regulatory regime, whether it’s the PRA or Lloyd’s Minimum Standards in London or Sarbanes-Oxley in the US.
This presents global specialty insurers with multiple challenges for deploying adequate underwriting controls and ensuring regulatory compliance:
● Underwriting controls can be inefficient and deployed at branch level making it hard to ensure that business is being written within the set underwriting parameters
● Regulatory data checks are often performed at local (branch) level, using manual exception reporting / email making it difficult to provide group level oversight
● Underwriting or regulatory exceptions are often spotted reactively when reports are compiled at month or quarter end leaving little time to investigate and a lack of visibility as to the root cause.
● Data for regulatory reporting purposes is captured downstream and typically suffers from repetitive data quality issues due to poor business practice upstream or issues with inflexible legacy systems.
● M&A activity requires carriers to be able to quickly apply the underwriting and regulatory controls they need on the acquired entity, often before systems and data sets are merged.
● Existing, legacy data checks for underwriting governance are often basic, error prone and lacking the full audit trail capability required to satisfy external scrutiny.
WHERE DQPRO FITS:
DQPro enables carriers to deploy a comprehensive set of underwriting controls, evidence regulatory compliance, reduce operating risk and reduce time spent chasing and fixing issues with business users. DQPro allows carriers to:
● Proactively detect underwriting breaches and regulatory data issues on a daily basis allowing teams to get on top of issues quickly, identify training needs and reduce processing pain at month/quarter end
● Set policy and ownership for key regulatory data capture at individual and team levels and directly flags to the responsible user/manager when this is not met whilst
● Automated auditing – DQPro tracks and records all underwriting and regulatory exceptions and any corrective measures taken to significantly improve evidencing, compliance and audit preparation time.
DQPro has given underwriting governance teams powerful, 360˚ oversight across some of the largest and most complex specialty insurers in the market saving a minimum of 40 to 60 FTE days annually through improved visibility, streamlined workflow and control coverage.
Specific examples include:
- Comprehensive EPI monitoring – where there can be substantial variance of expected premium from the actual amounts received which impacts actuarial forecasting and financial reporting and can result in underused capacity.
- Monitoring underwriting authorities e.g. line size breaches across specific classes of business, branches and territories.
- Daily Risk Code monitoring to ensure that all risks written are within the terms of the business plan or Lloyd’s SBF.
- Ensuring correct loss code / claims event coding to optimise reinsurance recoveries saving substantial costs.
- Identifying excessive premiums or commissions for a specific class of business.