Do you wonder if some regulatory rules such as the upcoming Solvency II or requirements such as the OECD’s Financial Action Task Force (FATF) Recommendation 5: Customer due diligence and record-keeping, are something that would impact a Property and Casualty Insurance organization.
Specifically when it comes to verification of beneficiaries before issuing payments (stated as protecting policyholders and beneficiaries), by verifying information such as in ownership, articles of incorporation, business names, bankruptcy, litigation (history and pending), etc. for current or potential risks. Apparently, some financial institutions don’t even ask the policyholder for the information, but rather automatically go to a third party to get that information. This is to avoid any possibility of getting incorrect, outdated or falsified documents.
The OECD requirements outlined FATF Recommendation 5 which affects all insurance and financial institutions globally. There are a lot of requirements regarding Customer Due Diligence (CDD) and about insurance companies’ need to confirm identification of policyholders and beneficiaries. For example, bullet a): “Identifying the customer and verifying that customer’s identity using reliable, independent source documents, data or information”.
I wonder if companies think about this at all, or to what degree, if they do. There are service providers that currently provide much of this information to life insurers and banks, but not very many P&C insurers at this time. Maybe this will change with time.
My take on this is that by acquiring the information for all risks at the underwriting level, you would be able to do an analysis on commercial risks to find a relationship between corporate profiles and loss experience, and then possibly get automatic updates (like credit score updates for consumers) for any changes in a commercial enterprise. The information would also then be available for claims investigations 100% of the time rather than only once in a while.
Food for thought, but drop me a line if you have any thoughts on this.
Roch
