Case study: How automation can ease the compliance burden

Increasing regulation, persistent talent shortages, rising cost pressures and an ever-changing risk landscape are creating unprecedented compliance challenges for the insurance industry.

It’s no surprise that compliance teams are looking to technology to help reduce the regulatory burden. 

According to Deloitte, demand for solutions across the financial services industry has driven the rise of RegTech; the adoption of emerging technologies to automate some of the more routine compliance tasks and reduce the operational risks associated with meeting compliance and reporting obligations.

End to end compliance 

The term RegTech might be relatively new, but BAIS insurance technology is one company that has been developing technology-driven solutions to address compliance challenges since 1993.

The company’s most recent iBAIS 2.0 system is a full, end-to-end policy and claims processing system with trust accounting and full general ledger designed for small-to-medium and corporate brokers, underwriting agencies and claims management companies.

It also integrates with third-party payment and document management software providers such as DEFT, BPay, Sunrise, OfficeTech and OrganiseIT.

“Our approach is to minimise the chance for human error and reduce the time it takes to produce the various reports required,” says BAIS CEO David Hampton.

“Our software helps clients to avoid accidental non-compliance, for example by automatically generating and recording Financial Services Guide (FSG) distribution.

"We also aim to make it easy to report on and verify compliance. For example, the FSRA Report lists the date and version of the FSG they have been issued.”  

More time with clients

Global broker BMS Risk Solutions has been using the iBAIS 2.0 system since 2018. Head of operations Celia McCormack says the technology has meant staff can spend less time on reporting and more time helping clients.   

“From a compliance perspective, one area where we find the system especially helpful is Unauthorised Foreign Insurer (UFI),” McCormack says.

“These don’t occur regularly but, when they do, it’s imperative that they’re reported accurately. The iBAIS insurance system takes care of all the complications that come with UFI business.” 

BMS also uses the software to produce Australian Prudential Regulation Authority (APRA) reports, including full audit reports to verify the figures in Form 701. 

“Where we place business with intermediaries, we’re able to include the details of our client’s actual underwriter,” she says.

“The technology is also updated as soon as new compliance and statutory requirements are needed. As we’ve been growing rapidly recently, having these compliance features built into our system reduces the possibility of errors and ensures a more consistent approach to our compliance.”

Local knowledge

Market Lane’s underwriting agency has several complex co-insured binder agreements with a combination of local and international insurers.

“We had been struggling with the amount of manual reporting we needed to do using our previous systems and we needed reliable trust accounting and audit reports,” says managing director David Porteous.

After evaluating a number of insurance systems Market Lane opted for iBAIS in 2022.

“They are an Australian-owned company with a local service team,” says Porteous. “They have spent 30 years supporting the insurance industry and so they know exactly kind of systems and compliance requirements an Australian underwriting agency needs.

"And the fact that the system is also able to provide bordereau reports with ease is an added bonus.”

An open dialogue

Hampton says that an open dialogue with the insurance industry and regular consultation with BAIS’s user group is key to staying a step ahead of changing regulatory requirements and updating products to suit. “Our sanctions-checking capability is latest example of this approach,” he adds.

Like McCormack, Porteous appreciates having more time to focus on brokers and their clients.

“We’re spending less time and money on a host of different reporting requirements,” he says. “iBAIS handles all the statutory charges for our overseas binders including withholding tax as well as APRA reporting.”

How RegTech can help with compliance

Specifically, iBAIS caters for the compliance needs of the Australian insurance industry. Its services include the following:

• FSRA Automatically generate and record Financial Services Guides, Statements of Advice and General Advice Warnings. 

• Vulnerable clients Record vulnerabilities and alert staff when they access these records. 

• Target Market Determinations Record confirmation that the client fits the key attributes of the insurance cover and is eligible for it. 

• APRA reporting Produce reports on all transactions in the required APRA format, including compliance related to Unauthorised Foreign Insurers. 

• Trust accounting Generate a full suite of audit and trust accounting reports each month. 

• Commissions disclosure Disclose commissions in any nominated documents as required under the Code of Practice. 

• Anti-hawking Maintain requests to opt out of communications and other contact preferences on client records. 

• Stamp duty exemptions Capture declaration dates for NSW Small Business Stamp Duty exemptions and, if eligible, automatically remove Stamp Duty on specified classes. 

• Sanctions checking One of the newest additions to the system prevents inadvertent business relations with prohibited entities. 

• Bordereau reporting Help with meeting Lloyd’s binder obligations and simplified bound/written and paid bordereau reports.