Ernst & Young has asked Chief Compliance Officers from 20 global insurance companies. Many say, the compliance function has changed drastically while upcoming changes are still to come. Seven key themes strike out.
Chief Compliance Officers see compliance as playing a significant role in achieving organisational success as they are an important part of the control framework and work closely with other executives. Reporting lines normally reflect the locations of the compliance functions and the regulatory framework the firms operate in. In most firms, compliance is executed at a group and at a local level.
Compliance activity levels are high, say participants, and assessments, monitoring and testing are increasingly used by them. All survey participants conduct compliance risk assessments and monitor key measures.
According to respondents, reporting of compliance activity is extensive. In many companies, CCOs report to their board or senior executors at least quarterly. Local reports are often aggregated for group reporting and some firms have introduced standardised quantitative information.
Compliance departments own the relationship with regulator in 38% of interviewed firms. The exact relationship depends on factors such as legal and regulatory frameworks, market conditions and location. Contact with regulators occurs at least monthly for most CCOs. 65% are at least visited annually by regulatory authorities.
Consumer protection is high on the CCOs’ agendas. 72% of them state that they are impacted by new regulation relating to it. Strategies for compliance include developing group-wide consumer protections standards, stronger approval processes for new products as well as enhanced product oversight and governance processes.
Only few CCOs perceive their IT systems as advanced. 77% of them describe their technology as “basic” as it is only able to collect, analyse and share information. Still, there is huge potential for leveraging technology.
Over time, compliance departments have increased in size over the last year and are expected to growth further as they need to meet complex regulatory requirements and growing management expectations. Moreover, compliance becomes more supportive as well as forward-looking and is challenged in an international business context. “Given these challenges, it’s not surprising that some compliance functions are having difficulty hiring and retaining talent,” says EY.