New federal regulations related to the Dodd-Frank Act are currently being rolled out across the financial services industry, affecting not only banks but insurance companies as well. The goal of these new regulations is to increase consumer protection by increasing transparency. To accomplish this, new regulatory commissions have been created to monitor all activities that are financial in nature. These activities include insuring, guaranteeing or indemnifying against loss, harm, damage, illness, disability or death.
Title V of the Dodd-Frank Act establishes the Federal Insurance Office (FIO). While the office has no regulatory powers, it does have the authority to request information. To prepare for the changes ahead, IT departments are taking steps to update current data management systems in order to ease the burden anticipated when the FIO starts requesting information. Currently, most insurance companies have multiple legacy systems spread across many departments. This means that data may be duplicated, incorrect, and in a variety of formats.
Data consolidation will be an important part of new regulations, as insurers will need to report on customers and their policies. Since data is currently spread across multiple systems, insurers are investing in modern data management systems that will consolidate data across the organization. While this is a step forward in improving the accessibility of data, reporting will still be inaccurate if data files are incorrect or duplicate records exist.
Having an accurate, consolidated database allows insurers to improve financial reporting and provides peace of mind as regulations change. Besides the benefits to regulatory compliance, accurate data also improve many other departments across an insurance organization.