Risk, regulation at forefront of insurance symposium
June 2, 2015 by Matthew Rizai, press@workiva.com
Risk reduction has been at the core of the insurance industry ever since English tradesmen banded together for mutual protection following the Great London Fire of 1666. Their efforts eventually prompted coffee-house owner Edward Lloyd to suggest ship owners employ a similar system to jointly share the risk of losing cargoes at sea.
By the early 19th century, London merchants had extended a risk-reduction product to individuals, creating life insurance contracts for the wealthy. Accident insurance followed by mid-century, driven by the increasing frequency of locomotive collisions on England’s nascent railway system.
It wasn’t long before American merchants began adopting similar risk-reduction strategies. Today there are more than 6,000 insurance companies in the U.S.
Insurance as a product is very good at reducing risk for policyholders. But the insurance companies themselves face a whole different level of risks, and with risk comes regulation.
The Iowa Insurance Division is this state’s primary insurance regulator. All insurance companies must file quarterly, annual and other reports detailing their financial conditions, including assets, liabilities, income and investments. Some large companies in Iowa will deliver thousands pages of information on insurance operations to the division.
The Iowa Insurance Division employs a dozen examiners who constantly pore through the filings of more than 200 Iowa-based insurers to make sure they remain financially healthy and comply with state laws. Regulators also help insurance companies maintain proper balances between premium rates and profits by constantly monitoring insurance company investments.
The reports allow state examiners to provide a level of assurance to policyholders that the companies will be able to pay claims as needed. That’s achieved by making sure the insurance companies have adequate capital reserves for the risks they take.
Risk reporting can be difficult to accomplish. Risk data is spread across the enterprise and can be mired in old technology and conflicting formats. With cloud-based software technology, such as our Wdesk productivity platform, collecting that data and preparing risk and compliance reports can be streamlined and automated.
Better data and quicker access to trusted information mitigates risk and helps everyone in the process.
Companies benefit by being able to increase control and accountability of their data while improving reporting processes, thereby becoming more nimble and efficient.
Consumers benefit from healthier insurance companies that can offer lower rates and are more likely to pay claims.
And regulators gain more visibility into a company’s activities, which allows them to better tailor their oversight to each company’s inherent risks.
Iowa’s insurers are well known for their innovative insurance products, including various types of annuities and other retirement vehicles. That same cutting-edge approach will guide them as they continue to explore new technology solutions to further benefit their companies and their policyholders.