Built In’s Post

Compliance teams within Insurance firms continue to evolve and develop. In 2023 many an Insurance firm has created additional “Head of Compliance” roles within their teams. These new roles generally report into the individual that I would have called Head of Compliance in the past, but who is now called Chief Compliance Officer. With the Regulators seeking to avoid any one individual holding the SMF16 responsibility across multiple Legal entities, I can see how these additional Head of Compliance roles have developed. When we look at titles within Compliance Teams for Insurance firms going forward... ...What is the optimum set up? #ipsgroup #insurancecompliance #insurancerecruitment

𝗠𝗮𝗻𝗮𝗴𝗶𝗻𝗴 𝗰𝗼𝗺𝗽𝗹𝗶𝗮𝗻𝗰𝗲 𝗲𝗳𝗳𝗶𝗰𝗶𝗲𝗻𝘁𝗹𝘆 𝗮𝗻𝗱 𝗲𝗳𝗳𝗲𝗰𝘁𝗶𝘃𝗲𝗹𝘆 One of the most daunting compliance tasks is to be confronted by hundreds of compliance obligations & having to place these into some coherent order so that they can be adequately managed. Operating a business (whether as a broker, insurer, MGA, TPA, insurtech, service supplier etc) within the insurance industry, creates a number of inherent compliance obligations: - being an AFS Licensee; - being an APRA regulated insurer or having an insurer as a partner; - being a subscriber to industry Codes - through binder/agency/distribution/service supplier agreements. 𝗧𝗵𝗲 𝘀𝘁𝗮𝗿𝘁𝗶𝗻𝗴 𝗽𝗼𝗶𝗻𝘁 Frankly, it may be easier to call me & I can assist. However, a useful approach is to start with your AFSL general obligations (see s912A(1)) & align to industry Codes. Following that you can bring in other financial services laws & distribution/claim agreements. Let's look at this in practice: 𝘼𝙡𝙞𝙜𝙣𝙞𝙣𝙜 𝘼𝙁𝙎𝙇 𝙤𝙗𝙡𝙞𝙜𝙖𝙩𝙞𝙤𝙣𝙨 𝙬𝙞𝙩𝙝 𝘾𝙤𝙙𝙚 𝙧𝙚𝙦𝙪𝙞𝙧𝙚𝙢𝙚𝙣𝙩𝙨 The AFSL obligation to provide financial services efficiently, honestly & fairly aligns with GI Code Part 3 'honest, efficient, fair, transparent & timely' & Brokers Code Part 3.0 (a) professional commitment, (b) ethical behaviour, & (c) transparency & accountability. The AFSL obligation to ensure your representatives (staff & AR's) are competent & trained dovetails with the GI Code requirement to have trained & competent employees, Distributors & Service Suppliers (Parts 4, 5, 8 & 9). Likewise, the Brokers Code requires training for employees & Authorised Rep's (Parts 5.0 & 8.0) You will find that obligations within Binder/Agency agreements & other contractual obligations include similar obligations to the AFSL/Code, & can be aligned. 𝙂𝙧𝙤𝙪𝙥𝙞𝙣𝙜 𝙨𝙞𝙢𝙞𝙡𝙖𝙧 𝙤𝙗𝙡𝙞𝙜𝙖𝙩𝙞𝙤𝙣𝙨 Grouping similar obligations enables key control(s) to be designed covering all the requirements rather than having a separate control for each individual obligation. Managing obligations through grouping reduces complexity, promotes efficiency & facilitates staff & AR understanding & awareness. Importantly, it shifts the focus from the obligation to the key control(s). In practice, this means rather than worrying about 150+ obligations, management focus is on the 40-50 key controls. It follows that a control testing program is critical as is data (incidents/complaints etc) to validate the results of control testing. Grouping obligations & managing through key controls is the foundation to designing an adequate compliance arrangement (framework) adopting a systematic approach. Should you need assistance in implementing compliance arrangements that manage your compliance obligations efficiently & effectively, do not hesitate to contact me. #insuranceindustry #insurance #compliance

How to reignite passion for Audit of PIEs - Indian Regulatory Style: Sectoral (Prudential) Regulations-Securities Market Regulations-Corporate Laws/Rules Many Indians keep shouting 'we are different from the rest of the species on earth'. Yes, that is very true with our Regulatory Architecture Biz & Professions. We want to imbibe the contemporary global standards but add a bit of our spices, at times too much, making the end product unpalatable. Recently on 22 May 2024 Insurance Regulatory and Development Authority of India (IRDAI), Insurance Sectoral Regulator, has revised its Corporate Governance Regulations of 2016. Para 1 starts with 'Corporate Governance is understood as a system of financial & other controls in a corporate entity and broadly defines the relationship between the shareholders, Board of Directors and management.' No doubt financial reporting is a critical building block of Corporate Governance, but is it right to reduce the larger concept of Corporate Governance to just one of its building bocks? Para 2, 3 & 4 - There are number of references to provisions of the Companies Act 2013 - Independent Directors, Audit Committees, Related Party Transactions, Corporate Social Responsibility etc. If there are already comprehensive laws/regulations applicable to Insurance Companies, why issue these separate guidelines by the Sectoral Regulator? What if there are contradictions between the two? is this is a big weakness in the Indian Regulatory Framework? is the Indian Sectoral Regulator (IRDAI) attempting to direct non-company insurers like LIC to follow the requirement of Companies Act 2013? Annex 6 - Appointment of Statutory Auditors by the Insurers This section goes to list down many eligibility requirements including no.of years Partners association with the firm, Max Number of Audits, Auditors Rotation & the popular mandatory Joint Audit etc. Yes, it does refer to Co. Act Provisions specifically S.144 Non-Audit Services. It mandates Joint Audit which is optional under Co. Act 2013. IRDAI mandates Rotation of Auditor every '4' years which is contrary to S.139 of Co. Act that mandates appointment of Two terms of Five years for a Firm of Auditors and One of Term of '5' years for an individual. An critical question is what shall the Insurance Companies do? The regulations also permits additional work other than statutory audit- What are these additional works permitted? Perhaps, what is needed by the Indian Sectoral Regulators is to adopt the principle based global best practices e.g. Basel Committee on Banking Supervision (BCBS) Guidelines on "External audits of banks' March 2014. In my next post I will elaborate on the key principles - Audit committee’s responsibilities in relation to the external audit & its relationship with the external auditor, Engagement between the supervisor (RBI) and the external auditor & Engagement between the banking supervisory authority (e.g. RBI) & the audit oversight body (NFRA)

Directors and Officers (D&O) policy protects directors, board members, and other individuals in management and supervisory positions from possible legal liability if they are indicted for decisions made to run a business. Directors and Officers Insurance claims could be anything like: i. Breach of fiduciary duty ii. Misrepresentation or Mismanagement iii. Failure to comply with laws or regulations iv. Securities fraud v. Employment practices But why do you need Directors and Officers Insurance?
 Well, because a D&O policy helps mitigate costs related to: 1. Legal Expenses - During the legal proceeding, there are various costs a company or its directors may have to incur. The D&O policy helps to cover such additional costs. i. Costs of securing bail and bond for the insured person ii. Costs due to attendance at court proceedings, hearings, trials, and depositions iii. Costs incurred due to the provision of documents required by the investigator iv. Costs of hiring/counseling legal advice from a third-party v. Costs to preparing/attending an investigation. 2. Public Relations Expenses - Such lawsuits attracted by directors and officers reflect poorly on the company as well. The negativity and disloyalty can be felt among its customers. Therefore, D&O policy also covers loss mitigation costs during this situation. i. Cost of hiring/counseling a third party to mitigate the negative image ii. Cost of holding a press conference or other due diligence during such situations 3. Others - There are various other expenses a company might incur as per the requirement of the hour. Such reasonable additional costs are also covered in the D&O policy. i. Costs of self-reporting a potential violation/claim to relevant authorities ii. Costs of extraditing the insured person if detained in a foreign country iii. Costs incurred due to kidnapping or seizing the insured person by fraud, for ransom. A D&O Insurance policy also has a dedicated Additional Limit for Non-executive Directors and Officers: With this add-on cover, you get an extra layer of protection that is added to the overall coverage limit for non-executive directors and officers of a company. #directorsandofficers #businessinsurance #BimaKavach

Small businesses can also be affected by antitrust litigation. While my most recent HWP Insurance post highlights antitrust cases against several major real estate companies, this is something small business owners should be aware of as well. Having a robust D&O policy can help protect you in the event of an antitrust suit. However, insurance is typically the most expensive way to manage your total cost of risk. A few risk prevention tips: 💡 Never discuss price levels, purchasing terms, or production figures with competitors. 💡 When attempting to do competitor research, use publicly available info. 💡 Develop a formal, written policy addressing all prohibited anticompetitive behaviors. This should be distributed to all employees.

Corporate Risk Financing Function 1. We are working on an SaaS tool that provides significant support to experts working in Corporate Risk Financing (CRF) to enhance the perception of the field by decision-makers by an order of magnitude (.000,-). This way, the chances of the company using our system ending up in a situation similar to nearly half of the companies suffering significant losses, as described in the article, can be significantly reduced: • Long, protracted disputes, and litigation with insurers. • Compensation averaging 40% less than expected. The article is based on the British market. Still, it is not difficult to see that if this is the situation in one of the countries with the largest insurance culture in the world, then few countries can hope for better results in corporate matters. What are the BASIC REQUIREMENTS for the CRF function? Please give your opinion in the comments.

Corporate governance is crucial for insurance companies to maintain trust and transparency. It involves establishing rules and processes for effective direction and control. In the insurance sector, high standards of corporate governance are vital to uphold trust with policyholders, regulators, and stakeholders. Here are key areas where this is crucial: - Risk Management: Robust frameworks are essential to identify, assess, and mitigate risks effectively. This includes setting risk appetite, monitoring exposure, and implementing controls. - Transparency and Disclosure: Insurance companies must be transparent in financial reporting, product offerings, and business practices to build trust. - Independent Oversight:An independent board of directors is crucial to ensure that companies are managed in the best interests of policyholders and shareholders. - Ethical Conduct:Maintaining ethical standards is key, including fair dealing, integrity, and compliance with regulations. - Accountability:Holding management and employees accountable for their actions and decisions is essential for ethical conduct. By implementing strong governance practices, insurance companies can safeguard the interests of all stakeholders, ensuring stability and growth in the industry.

✳️ Exploring the Myth: Regulatory Compliance 📚 In the dynamic landscape of insurance broking, the notion that regulatory compliance falls solely on the shoulders of the Compliance Officer is a prevailing myth. 🚫 While Compliance Officers indeed play a crucial role in ensuring adherence to regulations, the truth is that regulatory compliance is an organizational imperative that transcends departmental boundaries. 💼 It is important to understand that regulatory compliance is not just a box to check off—it's a culture to cultivate across all levels of the organization. From frontline staff to executive leadership, each member of the team must shoulder the responsibility of upholding regulatory standards. 🛡️ Consider this scenario: A client is seeking #insurance coverage for a unique risk. Brokers, in their efforts to provide comprehensive solutions, must navigate a maze of regulatory requirements to ensure compliance. Here, the responsibility doesn't rest solely on the Compliance Officer's desk; it's a collaborative effort involving sales, the legal team, and support staff to ensure every detail aligns with regulatory mandates. 🤝 Moreover, fostering a culture of compliance empowers every individual within the organization to be vigilant, proactive, and accountable. It's about ingraining the principles of compliance into daily operations and decision-making processes. 💡 For instance, sales team members undergo regular training sessions to stay updated on regulatory changes and best practices. This equips them with the knowledge and skills needed to navigate complexities while maintaining #compliance standards. By decentralizing compliance responsibility, organizations can not only mitigate risks but also foster a culture of trust and integrity. 🌟 In essence, regulatory compliance isn't a task relegated to a single department—it's a collective commitment that must be woven into the fabric of the organization. By embracing this truth, organizations will not only ensure regulatory adherence but also enhance their reputation as a trusted partner in the insurance industry. Together, let's uphold the highest standards of compliance and ethics, setting a benchmark for excellence in our industry. 💼✨ ✴️ Remember, there are no individual gladiators or fallen heroes… it's the organization that wins or loses. #RegulatoryCompliance #InsuranceIndustry #ComplianceCulture #Teamwork #EthicalBusiness #Leadership #InsuranceBroking

Wonderfull "The reduction in the audit engagement period from 10 years to 4 years is a strategic move by the IRDAI to enhance audit quality in the insurance sector. By introducing new auditors at regular intervals, the regulator aims to reduce the potential for complacency and promote a rigorous review of financial statements every 4 years. This" #irdai https://lnkd.in/gSxRAYAW

𝟏𝟎 𝐭𝐢𝐩𝐬 𝐭𝐨 𝐬𝐮𝐜𝐜𝐞𝐬𝐬𝐟𝐮𝐥𝐥𝐲 𝐞𝐦𝐛𝐞𝐝 𝐜𝐨𝐦𝐩𝐥𝐢𝐚𝐧𝐜𝐞 𝐢𝐧 𝐲𝐨𝐮𝐫 𝐛𝐮𝐬𝐢𝐧𝐞𝐬𝐬 The key to embedding compliance in your General Insurance business is 𝒑𝒆𝒐𝒑𝒍𝒆. Leave the technical side of compliance to specialists such as myself & focus on your people. 1. 𝑻𝒉𝒆 𝒕𝒓𝒖𝒆 𝒑𝒖𝒓𝒑𝒐𝒔𝒆 𝒐𝒇 𝒄𝒐𝒎𝒑𝒍𝒊𝒂𝒏𝒄𝒆 𝒊𝒔 𝒕𝒐 𝒑𝒓𝒐𝒕𝒆𝒄𝒕 Dont talk about laws or rules, not inspiring language. Talk about how compliance creates an environment that protects your customers, clients, people, the business, partners & other key stakeholders 2. 𝑪𝒐𝒏𝒏𝒆𝒄𝒕 𝒕𝒉𝒆 𝒉𝒆𝒂𝒓𝒕 𝒘𝒊𝒕𝒉 𝒕𝒉𝒆 𝒉𝒆𝒂𝒅 Everyone has someone like my elderly mum in ther lives. Mum lives by herself. She banks & buys insurance. Compliance is about protecting my mum & people we deeply care about. Involving the heart, brings about caring & caring brings actions 3. 𝑻𝒉𝒆 𝒑𝒐𝒘𝒆𝒓 𝒐𝒇 𝒔𝒕𝒐𝒓𝒚𝒕𝒆𝒍𝒍𝒊𝒏𝒈 A story about Paul's mum is far more powerful than section 912(A)(1)(g)(ii). Use storytelling to sell the message of compliance. 4. 𝑬𝒗𝒆𝒓𝒚 𝒑𝒆𝒓𝒔𝒐𝒏 𝒉𝒂𝒔 𝒂 𝒑𝒂𝒓𝒕 𝒕𝒐 𝒑𝒍𝒂𝒚 Creating a compliance ecosystem needs everyone to actively play a part. From incident reporting to following the processes. We all have a role to play 5. 𝑬𝒎𝒃𝒓𝒂𝒄𝒆 𝒕𝒓𝒂𝒊𝒏𝒊𝒏𝒈 Train people on the why & how, & less on the technical. How compliance protects? How to identify incidents & complaints? Why should I care? 6. 𝑬𝒙𝒑𝒆𝒄𝒕 𝒕𝒉𝒊𝒏𝒈𝒔 𝒕𝒐 𝒈𝒐 𝒘𝒓𝒐𝒏𝒈 We are human & stuff happens that's not supposed to. The role of compliance is to make it easy to identify, remediate & rectify when stuff goes wrong. It's impractical from a business viewpoint to build a compliance system that 100% prevents things going wrong - unless you want to stop being human. 7. 𝑪𝒓𝒆𝒂𝒕𝒆 𝒂 𝒔𝒂𝒇𝒆 𝒆𝒏𝒗𝒊𝒓𝒐𝒏𝒎𝒆𝒏𝒕 If you want people to self-report & raise incidents & complaints promptly you need to create a safe environment for them to do so. 8. 𝑯𝒂𝒗𝒆 𝒂 𝒇𝒓𝒂𝒎𝒆𝒘𝒐𝒓𝒌 A framework provides a foundation to manage compliance in a systematic, risk-based approach. A fit-for-purpose framework supports & enables your people 9. 𝑫𝒐𝒏'𝒕 𝒃𝒆 𝒉𝒆𝒔𝒊𝒕𝒂𝒏𝒕 𝒕𝒐 𝒇𝒐𝒓𝒎𝒂𝒍𝒍𝒚 𝒓𝒆𝒑𝒐𝒓𝒕 𝒃𝒓𝒆𝒂𝒄𝒉𝒆𝒔 At a time of 'naming & shaming' don't be hesitant when deciding whether to report a breach to ASIC or a Code Committee. Timely reporting is a feature of good compliance arrangements & being a responsible corporate citizen. 10. 𝑲𝒆𝒆𝒑 𝒄𝒐𝒎𝒑𝒍𝒊𝒂𝒏𝒄𝒆 𝒕𝒐𝒑 𝒐𝒇 𝒎𝒊𝒏𝒅 Compliance is not a set & forget exercise or annual activity. To truly embrace compliance as a way of working it must be top of mind. Do leaders walk the talk? Is compliance part of your regular team conversations? Can you access FAQs easily on your internet? Do you know the risks & controls in your area of the business? 𝐂𝐨𝐦𝐩𝐥𝐢𝐚𝐧𝐜𝐞 𝐢𝐬 𝐚𝐛𝐨𝐮𝐭 𝐩𝐞𝐨𝐩𝐥𝐞 In summary, think less about rules, laws, clauses & sections & more about people.