2023 will be the year of compliance
Managing compliance in a more technologically enabled way will be pivotal for players across the insurance industry.
Are you tired of the word “disruption” yet? We definitely are. This past year has brought a much-needed shift in the way insurance technology companies are viewing themselves in relation to legacy insurers and agencies.
We’ve seen a transition from the idea that the industry needs to be turned on its head by technological innovations, to the premise that technology can enable insurance professionals to do what they’re best at while lightening the load on everything else. In other words, today’s insurtechs (the smart ones at least) view themselves as viable business partners, here to ease the pain points of a historically successful (though lower-tech) industry.
So let’s talk about compliance. It’s a topic insurance agents and agencies, carriers, and MGAs/MGUs are required to care about. It’s also an incredibly complex, nuanced undertaking, with laws that vary by state and are constantly evolving. For most insurance professionals today, compliance involves more hands-on work than they’d like. From the staff of the largest insurance carriers to a single insurance producer, everyone could do more of what they really want to do if compliance was automatic.
That’s why our industry predictions for the coming year revolve around how compliance, and specifically, managing compliance in a more technologically enabled way, will be pivotal to everything from producer and staff recruitment to cost savings and risk reduction.
Prediction 1: Compliance will be a differentiator among agents and producers
As the insurance industry faces a talent shortage above and beyond what other sectors face, carriers, agencies and everyone in between need to consider how their processes and technology will help or harm their attempts to bring on new talent. Producers, agents, brokers, and advisors — regardless of what name they go by — are the lifeblood of the industry as they build trust with clients and sell much-needed insurance products.
We predict (and, in fact we’ve already witnessed) that organizations that make it quick and effortless for producers to get onboarded and stay in compliance throughout the lifecycle of their licenses, will be the partners of choice for the hundreds of thousands of insurance producers working today and in the future. This is particularly true as younger, digital-native generations discover insurance as a career. These new producers want an “Amazon” experience, not an antiquated one.
Prediction 2: Compliance will be a differentiator among insurance carriers
Just like the ease of staying in compliance will help agencies attract and retain producers, insurance carriers are starting to see the value of partnering with agencies that prioritize compliance at every step of their business.
Carriers shoulder a large burden for the compliance of each agency they contract with, all the way down to each agent appointed to sell their products. And no carrier wants to take on more risk than they have to. It’s not surprising then that they’ll prefer to do business (and more of it) with downstream partners who place a heavy emphasis on maintaining a compliant organization.
When agencies implement solutions that make compliance a no-brainer, it reduces the risk a carrier will have an agent selling their product out of compliance or that they’ll pay a commission to a producer who isn’t properly licensed.
Prediction 3: Modern compliance management will be more of a cost-mitigation strategy
As inflation remains high, insurance markets harden, and borrowing money becomes more expensive, insurance carriers and agencies need to reduce unnecessary spending. This may seem like the wrong time to expect them to invest in new solutions when they could keep doing things “the way they’ve always done it.” But in fact, the cost of doing nothing is higher than most people realize.
Automating compliance management saves back end and operational costs. It lets you do more with your current headcount, or do even more without increasing payroll. It enables growth (i.e. more agents, more carrier partners, more geographic markets, more insurance products) without multiplying the amount of compliance-related work their staff has to keep on top of.
When you view it that way, it’s no wonder that more and more organizations across the insurance distribution channel will be adopting advanced and automatic compliance management as a way to reduce operational costs while enabling growth on their revenue teams.
Prediction 4: Baked-in compliance will be more of a risk-reduction strategy
All the fancy technology in the world doesn’t matter if someone still has to worry about whether the right compliance rules are being enforced for the right people at the right times. If that’s the case, you’re hardly doing better than just employing more people to check and double check license compliance status.
This is why we predict a rise in the adoption of insurance compliance solutions that truly and fully automate compliance from one end of the distribution channel to the other. Solutions that include baking regulatory changes into the system as soon as they happen will become highly integral to risk-reduction strategies. When compliance is built-in and automatic, it removes the risk, the questions, the “what-ifs” that some tech solutions leave on the table. In a world that keeps getting riskier, carriers, agencies, MGAs/MGUs and other insurance entities will increasingly understand the value of having “set it and forget it” compliance solutions in place.
Insurance compliance isn’t optional. Neither is insurtech.
As we move towards completing the first quarter of the 21st century, it doesn’t take a crystal ball to predict that insurance industry regulations will continue to be complex and ever-changing, while technology will strive to stay a step ahead.
Our prediction for 2023 is that those who take the path of tech-forward, automated compliance will be better poised to capture market share even in a hardened environment while lowering compliance risks and operational costs at the same time.
Niji Sabharwal is CEO AgentSync, a customer-centric producer management solutions that tackle pain points associated with how insurance producers get licensed, onboarded and ready to sell.
Opinions expressed here are the author’s own.
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