Regology introduces a new regulation system for 20 countries
Using artificial intelligence (AI), the company’s system is able to scale millions of laws across the aforementioned 20 locations (including the US, Germany, France, Canada and others) and set billions of links between them.
Estimating that, despite technological advances, large US-based firms pay $10k per employee in regulatory costs, Regology’s digitised and integrated platform provides a faster, cheaper and more reliable method for navigating a complex environment.
Available across seven languages and covering millions of legal requirements, Mukund Goenka, Co-Founder and CEO, states that the company is on a mission to revolutionise modern regtech.
“Our world-class team and network of experts in international law, algorithms and linguistics are pushing this mission forward every day.
“One such example is year-long research in AI-based context-awareness in laws that we conducted in conjunction with experts from the University of Illinois Urbana Champaign. We opened this research to the public domain by presenting it at the esteemed KDD NLLP conference in August 2020.”
Regtech: vital for insurance’s future
Although the process of digitising insurance has many benefits, one consequence has been an increasingly complex regulatory environment that makes further developments difficult.
Regarded as a wholly necessary albeit innovation-stifling component of the industry, regulations continue to dictate insurance’s future and meeting them successfully could be both transformational and profitable.
The report ultimately concluded that insurance companies should adopt a ‘watch, but don’t wait’ mentality; they must be cautious while also investing in technology and/or partnering with regtechs that can enable leaner and more agile operations.
“Regtech can no longer be labelled as a buzzword, as it is most certainly a reality now,” said Deloitte.
“A consequence is the changing focus of the classic business model, which now needs to integrate regulatory risk management as a key enabling business practice together with product profitability and meeting customer needs.”
Lloyds Bank fined by FCA for misleading insurance customers
In many ways a continuation of the Financial Conduct Authority’s (FCA) quest to eliminate ‘price walking’ from insurance, Lloyds Banking Group has been heavily penalised for seemingly misinforming their customers.
Specifically, nine million home insurance policyholders were contacted and encouraged to renew for the chance of getting ‘competitive prices’. Furthermore, approximately 500,000 customers were promised ‘loyalty discounts’. According to the FCA, both claims were unfounded and false.
The £90mn fine leveled at Lloyds is the largest since Standard Chartered Bank was ordered to pay £102mn in 2019 for breaching money laundering regulations.
It remains purely speculative about how volitional this error in communication was. Nevertheless Mark Steward, Executive Director of Enforcement and Market Oversight at the FCA, stated the institution would not tolerate any situation with the capacity to harm customers.
“Firms must ensure their communications with customers are clear, fair and not misleading. [Lloyds] failed to ensure that this was the case.”
The bank had largely started to remove phrases like ‘competitive prices’ from its official communications since 2009. However, the FCA found that renewal forms still included such wordings as late as 2017.
Since the renewal prices offered were likely to be higher than those offered to new customers, or even if the policyholder switched provider, Lloyds was in fact deceiving the recipients of these communications.
Battling against insurance price walking
According to reports, 87% of customers offered the aforementioned ‘deals’ renewed. Although the FCA will not be ordering Lloyds to reimburse them, the bank itself has paid out £13.6mn to 350,000 customers by way of compensation.
“We’re sorry that we got this wrong. We’ve written and made payment to those customers affected by the discount issue and they don’t need to take any further action,” said a spokesperson from Lloyds.
“We thank the FCA for bringing this matter to our attention and since then we’ve made significant improvements to our processes and how we communicate with customers.”
As the battle to end insurance price walking continues, companies must be careful to establish a new relationship with their customers.
With instances like California auto insurers overcharging $5.5bn during the pandemic still fresh, the public’s perception of the traditional industry could quickly sour and contribute towards its decline in favour of digital-first competitors.
To recover, incumbent insurers will need to price their policies more fairly, make cover management easier, incorporate tech-based solutions where appropriate, and consider customer loyalty as a prize and not a right