LAS VEGAS–Information technology managers are playing ahigher-profile role in meeting regulators' calls for more insurancecompany data, said a panel of industry experts here at the ACORDLOMA Insurance Systems Forum.

Speakers at the session on “Why IT Leaders Need To Care AboutRegulatory Compliance” discussed the increasing reliance ofcarriers on quality data as they maintain compliance with themyriad of state and federal regulations governing different aspectsof the industry.

Among the more prominent, and expensive, regulatory structuresto stir debate within companies are the costs of compliance withthe Sarbanes-Oxley Act, which was enacted to increase theaccountability of senior company officers in financial reporting toregulatory agencies.

On average, according to Jim McIntyre, a director with Deloitte& Touche, companies are spending approximately $1 million onSOX compliance per $41 billion in revenue, and the issue hasstirred a “loud debate.”

Given the enormous amount of funding being put into SOXcompliance, Mr. McIntyre said it is more important that ITprofessionals ensure the information they provide for reporting isaccurate, or else it will add to what he called the “perceptionthat we are not in step with where the business is going.”

The problem is that SOX regulations are still being clarified,he noted, although auditors are starting to establish whatinformation is important and what is considered a “luxury.” Despitethis knowledge of “must have versus like to have,” however, he saidcompliance costs are likely to continue to rise.

Michael Rigby, a vice president and actuary for MetLife, arguedthat concern over the costs of SOX compliance may be important, butcompanies should also consider the costs of noncompliance, such asclass action lawsuits and the loss of prestige with consumers.

Mr. Rigby explained that IT can also help with other areas ofregulatory compliance vital to a company's operations.

MetLife, he said, has established a data warehouse to track itsinformation and aid in compliance with such bodies as the Office ofForeign Assets Control, which enforces sanctions imposed by thegovernment against countries, organizations and individuals deemedan enemy of the United States.

The company is able to re-check information that registers as a“false positive” to avoid the types of mistaken-identity situationsoccurring in airports, Mr. Rigby said.

IT also plays a significant role in the more mundane aspects ofcompliance for insurers, said Dan Durej, a second vice presidentfor St. Paul Travelers in charge of agency administration.

Mr. Durej said the process of keeping track of agents, theirlicenses and appointments would be impossible without soundinformation technology.

“I can't do it without you,” he told the IT audience, “and I cantell you that no other company can do it without you.”

Solely on the property-casualty side, he said that St. PaulTravelers maintains 48 legal entities in over 50 jurisdictions. Thecompany has over 15,000 contracted agencies, 100,000 producers, andfiles over 700,000 appointments and terminations annually. The costof such operations is significant, he said, noting that St. PaulTravelers will spend over $430 million this year just to keep itsagents appointed.

“We need to keep this data in sync,” he said. “If we don't,we're simply not in compliance.”

The penalties for not being in compliance can be severe, hesaid, noting that a carrier operating in Maryland faces a $10,000fine for failing to keep an accurate license number and appointmentdate for one of their agents, while failing to notify Coloradoregulators of an agency termination-with-cause within 30 days couldcost a carrier its license to do business.

IT is also a necessity for bringing a product to market, Mr.Durej explained, solely to help a company establish which agentsshould sell a product and ensure they have the necessary licensesand appointments. Such a job, he explained, would be impossiblewithout IT.

Tech support also helps with statistical reporting to stateregulators, noted Sandi Perillo, a technical analyst for TheHartford. Maintaining the quality of such data is crucial, shenoted, and can also play a role as a company examines itself–forexample, checking if a particular product is profitable.

Overall, Ms. Perillo advised that IT professionals should learna little more about the operations and information they aremanaging, which will help foster increased communication between ITand the insurance operations within a company.

“Work with the business, understand the business' needs,” shesaid.