Insurers face compliance technology headache

More than 90% of general insurance firms will not be able to meet a key Financial Services Authority (FSA) compliance deadline...

More than 90% of general insurance firms will not be able to meet a key Financial Services Authority (FSA) compliance deadline this week, according to a survey of senior managers in insurance companies.

The 14 January deadline is in place to ensure that the UK complies with the EU Insurance Mediation Directive.

The survey of 200 general insurers and brokers by information solutions provider Docucorp, suggested that large numbers of firms will become authorised by the FSA without having put in place the procedures it requires to comply with the new rules.

The demands for IT changes as a result of the new rules will be a major headache, said 80% of respondents.

For example, under the regulations firms must be able to access all information that the regulator may require, such as sales and policy documents and claims data, within 48 hours.

Almost 90% of respondents said their existing record keeping systems would be unable to cope with this requirement.

Docucorp managing director Tracey Robinson said, "The majority of firms are going to be relying on adaptations to their existing processes in the early stages of the new regime."

"However, experience of coping with a similar regulatory regime in the life assurance and investment management sectors indicates that IT systems that use rules to entrench compliant procedures within an organisation offer by far the safest and most cost-effective means of compliance," she said.

The survey also found that more than 90% of insurers believe the FSA has substantially underestimated the cost to the industry of implementing the new regulatory requirements.

Respondents also believed that other European firms will not be expected to meet such stringent compliance terms to satisfy the directive.

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