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Compliance requires increased sharing between computer systems and insurers


Alain Thériault

6 July 2017 07:00

Mike Donati, Tim Fitzpatrick and Luis Romero

The back-office systems become compelling having regard to their contribution in compliance. They have, however, the challenge of passing uniform data providing updates more consistent.

According to Mike Donati, CEO of Bluesun, the software provider of back-office WealthServ, the new regulations from the mutual fund industry tend to spread to the sector of insurance of persons. Mr. Donati believes the bar higher in accordance to the general agents. They will need systems that allow them to differentiate.

Vice-president vision and innovation of Solutions AGEman, Daniel Brisson adds. «The pressure of compliance is very high on the distributors.» For example, customers of distributors of insurance which are affiliated to securities brokers (national accounts) have high standards of compliance.

«We do a lot of custom development for them, and money is not an obstacle for these clients, often affiliated with large financial institutions. The national accounts subscribe wholesale insurance records, and are subject to a high degree of compliance in banks. Everything must be verified and must swing at the cenne near. If there are three commissions that are paid in a folder, it is necessary that it sticks, » said Mr. Brisson.

The general agents are busy

CEO ofIDC Worldsource Insurance Network, Ron Madzia confirms that it is crucial for general agents to offer advisors a platform that offers, among other compliance tools. While a general agent has no authority to require advisors to use its platform, Mr. Madzia argues that it will be extremely important for them to do so.

«Counsellors who do not have their own tool of compliance or who do not use the ours will eventually have to deal with the regulator. The latter will become more severe with regard to the monitoring of advisers and inspection of firms, » said Mr. Madzia.

PPI Solutions is working to enhance its systems to meet new compliance requirements. «There is no doubt that many improvements to our systems which we currently work are related to the compliance requirements of today and the future «, said its CEO, Jim Virtue.

In the context of new regulations, Mr. Virtue, remember that compliance is very important for PPI, for the advisors and clients of advisors. «We need to use our system back office in conjunction with other management tools, to enable us to identify compliance problems. «

Help advisors

MICA financial Services, in which the system AGEman has a gateway with the provider of systems advisers (front-office) Kronos Technologies, which allows, among other things, to its advisors access to Kronos ABF. «We can help our advisers to be concreted in case of inspection of thefinancial markets Authority. We tell them : send us your analyses of financial needs. We numériserons in our systems, » said its CEO Gino Savard.

Not the choice to have a system that provides compliance tools, » says David Benamron, director of the business benefits of the living and the folders advanced Financial MSA. «Especially when, in the event of inspection, the Authority will request the consultant to get his records for the last six months. With the legislative review that is coming up in Quebec, we expect that the advisers are linked to only one general agent. Then we will have to do it for the inspection of the adviser. It is much compliance that is behind this, » said Mr. Benamron.

Tim Fitzpatrick, CEO of VirtGroup, recalled that the general agent receives a commission from service to service in-force business. Orphaned clients must be assigned another advisor. However, the general agents need data to do that, » he says.

«After the police to be delivered, it is almost impossible to keep data up to date. There is also the problem of transfer of advisor to a general agent to another, or when a block of business is sold. On the side of Fundserv that handles transactions of mutual funds and segregated funds, the transfer of data is done automatically. There is no parallel in the insurance side, » he says.

The insurers pointed the finger

The supply of data from the insurers for proposals (application notification), current cases (pending) and in-force business (book of business) remains crucial. Their uniformity is just as important.

Organization which encourage initiative at all levels of the industry, CLIEDIS developed the standards called CITS (Canadian Insurance Transaction Standards). However, not all insurers who adhere to it, and their number may vary according to the type of power supply.

Currently, five manufacturers supplying VirtGate data on the proposals, eight of which are data on the cases, and in four the data on the current, recognized as the sinews of war to general agents. «The main challenge is that we don’t have enough feeds. We need to convince the insurers to create them. When there is not, the agent-general must make the entry of data by hand, with a screen-based interface, » says Mr. Fitzpatrick.

He explains that this resistance from insurers due to the fact that investing in supplies data does not give them immediate benefits. The CEO of VirtGroup is estimated that some understand more and more that investing in this direction will yield benefits in the long term.

«Insurers need to modernize their systems»

Insurers also have their back-office systems. CEO ofEquisoft, Luis Romero , provides solutions for analysis of needs and management of heritage, as well as solutions and illustrations of proposals for electronic insurance. It has also continued its mission to encourage insurers to modernize back-office systems, distributing over 12 years in Canada the solution ofOracle.

OIPA, for Oracle Insurance Policy Administrator, has retained, among others, the favours of The Capital. It is to study in other insurers in Quebec that Mr. Romero did not want to be named. Time is of the essence to act for the insurers, he insists.

«The back-office systems of several companies are old. They are often written in programming languages that are outdated, such as COBOL or Assembler, he observed. A lot of insurers use Ingenium, a system that has close to 30 years. Some have back-office systems that date back to 40 or even 50 years. This causes a problem of innovation. At the time of launching a new product, it’s going to cost the insurer millions of dollars to adapt its system. «

Emergency now

Why is this outdated ? There was not the same emergency that now, meets Luis Romero.

«The insurers are allergic to the risks and expenses. The projects are scrutinized, ten times rather than just one. During the preparation to the new taxation policies, insurers have largely patched their old systems, rather than take the opportunity to change them, » he lamented.

The situation, however, begun to evolve. He finds when he installs for an insurer to its solution before-wicket. It allows customers to interact with the insurer, and requires a communication system with rear-window.

«Connecting to a system written in COBOL, it is more complicated. It slows down the process. In the United States, our customers who have made this interface are passed to a policy issuance from 45 days to 10 minutes. There is an appetite among canadian insurance companies, now that they are out of the crisis and have become accustomed to low interest rates, » he observed.

Innovation can also come from smaller insurers who are more agile. He takes the example of’Humania Assurance, which takes advantage of its small size to innovate in this sense, with its product HuGO.

It is estimated that insurers do not move quickly on the formats CITS. The yard is gigantic : connect to the systems of general agents from various suppliers to the old systems of insurers, many times modified. «If the insurers replace their systems overwhelmed by other home systems, this will complicate things. If they opt for the same system, life will be easier for AGEman of this world, » he said.

Among its competitors in the systems of insurers are Accenture , and Fast. OIPA currently has a dozen clients, has revealed to Mr. Romero. There are about thirty of them in its solutions before-wicket.

General agents want more

The general agents are hoping that the situation will dénouera soon as this urge. We still lack these famous files CITS of whom we are talking about for years. This does not sense that the back-office systems do not have this information standardized in real-time with the insurers «, says the CEO ofAurrea Signature, Christian Laroche.

This situation is hitting the general agents in this era of compliance. Particularly in the processing of data on the in-force policies of their advisors.

«We can’t get the information from all insurers in real time on the in-force business. I have to assign employees to the task of obtaining data on the in force of all insurers. We are dealing with 17 insurers. If I can have it in real time, the adviser may have in real time also. This is very useful, for example, to assess the client portfolio at the dawn of retirement. This would also avoid my employees to alternate between Outlook and the system of back-office to process the data, » insists Mr. Laroche.

And their task is not trivial, » he recalls. In addition to the in-force, they must also treat the information of the insurance proposals, tracking new business, and the issuance of contracts, in addition to the treatment of commissions and bonuses, another sphere where the process of data exchange dragging the leg, he added. According to him, only formats CITS on new business are actually taxed at that day.

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