At first glance, the design and distribution obligations could be seen as compliance boxes to tick.
But a closer look reveals how they can create the momentum for better insurance products, better customer outcomes and, ultimately, better businesses.
Australia’s insurers have much to do between now and April 2021, when new design and distribution obligations (DDO) become effective.
The changes will transform the way insurers distribute products to retail consumers in Australia.
While the obligations of DDO are significant, forward thinking insurers will go above and beyond compliance to simplify products and make deep, lasting improvements to customer outcomes.
For many financial services institutions, DDO could be a game changer. By designing a DDO framework driven by purpose (rather than mere compliance) insurers will be more likely to:
- Build products that meet the needs of target customers
- Establish distribution controls to ensure those needs are consistently met
- Develop governance and culture to ensure products are sustainable
- Have people, processes and technology lined up and ready for the new DDO regime.
To achieve this, firms need to mobilise not only regulatory specialists, but also colleagues responsible for compliance, products, customers, legal, technology, and marketing. In order to be ready for DDO, PwC proposes organisations can prepare in three ways.