Digital platforms are continuing to transform insurance. How will insurance intermediaries gain assurance that new digital processes are working well?
The impact of Brexit and Covid, coupled with a period of increasing FCA focus and market consolidation, have presented significant challenges and opportunities across the broking sector. We believe that now’s the time to leverage our understanding of the risks and confront those challenges by providing bespoke Governance, Risk, and Control Assurance (GRC) services that reflect the modern insurance intermediary.
Over the past 20 months insurance intermediaries have witnessed a seismic shift in their operating models and regulatory scrutiny. In order to remain relevant they’ve needed to adapt quickly in an increasingly digital market place. Although viewed in early 2020 as only an interruption to business, the impact of the Covid-19 pandemic quickly evolved into a systemic change to business processes in order to meet both regulatory requirements and client and carrier expectations.
Fast forward to Q3 2021 and it’s now considered ‘business as usual’ to rely on emails, in lieu of client meetings, and slip completion via e-placement tools. While there’ve been a number of outwardly visible changes to intermediary operating models; we’ve also witnessed a period of process innovation and the development of more digital processes across operational and support functions; including finance, compliance, risk and control.
Innovation and development are seen as fundamental to business and sector growth and, while traditionally, the insurance sector has lagged behind in embracing digital opportunities, individual projects and initiatives were gaining momentum. The restrictions imposed in response to the global Covid-19 pandemic accelerated the adoption and implementation of multiple digitisation projects/programs within business and across the sector as a whole, specifically the use of e-placement tools such as PPL and Whitespace.
The accelerated digitisation across placement, workflow and payment authorisation processes concentrated on developing systems to facilitate transactions. However, limited consideration has been given to establishing control, review or reporting points within the processes. Now that these systems and process have had time to embed, organisations need to consider:
Data management, integrity and extraction;
Control and review points during or post-transaction;
Real-time or after-event monitoring;
The availability and frequency of reports;
How they can gain assurance that the processes and systems are correctly designed and are operating effectively; and
How these systems and processes can provide both the firm and regulator timely and meaningful information.
As firms approach 2022, there’s an opportunity to reflect on the hard work invested in the development of digital processes to ensure they’re correctly designed and operating effectively; represent sustainable solutions; and are meeting both internal and external reporting and data expectations.
The FCA Business Plan 2021-22 identifies the provision of operational data on a near real-time basis as a key component of the regulatory strategy. Firms that fall behind in the first phase of this initiative are likely to receive greater regulatory scrutiny or lose competitive advantage in the market.
The role of GRC continues to evolve rapidly to meet the changing control environments and digital challenges experienced by our clients. PKF’s GRC team leverage our tailored internal audit tools and techniques to review and assess digital control environments ensuring they remain; appropriate, effective, and meet the control objectives