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LONDON—A call for providers to express their interest in setting up a database to help global insurance program buyers with compliance is an important step in addressing the issue, say risk managers, brokers and insurers involved in the project.
Insurers, brokers, data companies and legal firms already have expressed interest informally in the project, Airmic Ltd. said last week.
The London-based association called on members of the insurance-related market to establish and maintain a database to provide guidance on admitted and nonadmitted insurers by jurisdiction.
The database also would provide information such as statutory obligations and restrictions, information about local insurers and whether insurance can be bought on a nonadmitted basis, mandatory policy forms and wordings, local tariffs and payment protocols, claims notification and processing, and the consequences and penalties of failing to comply, Airmic said.
The effort to develop a global database, which began about a year ago, has the support of the Federation of European Risk Management Assns., the International Underwriting Assn. and the London & International Insurance Brokers' Assn., Airmic said.
The New York-based Risk & Insurance Management Society Inc., the Brussels-based World Federation of Insurance Intermediaries and other bodies are being kept abreast of developments, it added.
Potential providers have until January to express their interest in establishing and/or maintaining the database, and it is hoped the service will be up and running by September 2013. No cost estimates have been released.
Helen Hayden, an Airmic board member, said the call for market players to voice their interest in the project is a huge step forward in finding a solution to the problems of ensuring that global insurance programs comply with local laws and rules.
The support of organizations such as the IUA and LIIBA is very important, she said, and has required a “mind shift” on the part of insurers to consider the issue from the buyers' point of view.
Since noncompliant global insurance programs affect the buyer, broker and underwriter, “we're all in this together,” Ms. Hayden said.
“The international insurance industry contains myriad compliance requirements, and keeping on top of these is no simple feat,” said Dave Matcham, CEO of the IUA, which represents London-market underwriters. “A compliance database for global insurance programs will undoubtedly prove a huge asset, and the IUA fully supports its creation,” he said.
“The creation of a single authoritative source of information has the potential to bring great benefits for our customers, brokers and carriers alike,” David Hough, CEO of LIIBA, said in a statement.
The database is to become a sort of code of conduct that will give a consistent interpretation of insurance regulations around the globe, said Praveen Sharma, global leader of insurance regulation and tax in London and a member of Airmic's working group on the database.
While regulations are “not always black and white,” the intent is to provide a consistent, industrywide interpretation of local insurance laws and rules so buyers whose programs are written on a subscription basis are not faced with discrepancies in coverage, he said.
This also would put the onus on regulators to clarify their rules if they consider the industrywide interpretation to be incorrect, he said.
Risk managers accept that “100% compliance is not possible,” he said, but a database would provide greater clarity, consistency and transparency on such issues.
While some insurers have tried to use their internal databases as a competitive advantage, an industrywide database would give buyers clarity, consistency and transparency, as well as allow insurers to concentrate on the fundamental differentiators of insurance, such as policy wording, handling of claims and pricing, he said.