P&C Compliance-Reporting Tips: Best Practices for a Thankless Task

When installing new policy- and claims-administration platforms, include the ability to capture the data required by every state in which you write insurance. For insurers whose policy- and claims-admin platforms aren't capable of pulling compliance data, alert your state bureaus: They may agree to work with you on a timeline that gives you breathing room to report without penalties. 

Whether you're incorporating your compliance-data collection process with a new or an existing platform, it is best to first conduct a survey of your entire bureau and state-compliance reporting needs and then address them on a priority basis.

#2  Periodically balance compliance and accounting reporting to ensure that the numbers add up.

Because your accounting and IT departments might be capturing and reporting data in different ways, it is essential to periodically balance your compliance and accounting reporting. If the numbers don't match, your bureau will likely ask you to explain the discrepancy—which could mean refiling in addition to fines.

In one recent example, the Insurance Services Office (ISO, an organization that develops standard policy forms, collects data and files it with state regulators on behalf of carriers that pay for its services) alerted a P&C insurer that the data it submitted on claims reserves was more than three times the dollar amount that accounting reported. This insurer worked with an outside vendor to correct the discrepancy—a process that took three months. 

A routine periodic check can help prevent your company from working after the fact to try to reconcile two different sets of numbers. 

#3  Implement a sound process by knowing your reporting needs.

Your insurance company (or the vendor you've retained for reporting services) should have a document detailing exactly what reporting needs to be done and what the deadlines are, for every line of business you write—and in every state in which you write it.

Without having such a process in place, it is a challenge to file consistently. Consider one insurer that did not take such steps: During one year, it reported the same month's data in two different quarters. This overlap in reporting caused a misfiling that required time-consuming correction measures in addition to penalties.

To help ensure consistency, run your data through a program that summarizes and creates a set of control totals (the data garnered by the IT department) to make sure the information you provide to the state matches your internal data. By implementing this type of thorough process, you can ultimately save up to 70 percent on compliance-reporting time.

#4  Identify and evaluate possible third-party assistance.

There are pros and cons to engaging third-party reporting assistance.

Pros: 

• Expert vendors will know virtually every change to bureau-reporting requirements.
• They will work with you to periodically balance compliance and accounting reporting.
• They will have a documented process in place to facilitate reliable reporting.
• They free up your staff to focus on expanding your business.

Cons:  

• You will incur expenses for the vendor's service.
• You will need to ensure that your vendor has the capability to do the job.

   A first-rate vendor will assume virtually all responsibilities for your compliance reporting and will be well-versed in all the complex, ever-changing reporting requirements. For example, the guidelines for reporting Commercial Statistical Plan data (overall information on commercial/business policies written by the insurer) for ISO is 1,636 pages long—and it changes every year. 

    If your business favors having an outside vendor, it's also important to spell out your service-level agreement. You should know the respective responsibilities between you and the service provider as well as who will be responsible should fines arise. Clarity is like a fence: It makes good neighbors.