Demand for regulatory, compliance & governance software is expected to reach a massive 120 billion USD by 2020... so where do carriers stand?

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Following on from last week's post on Investment Management, today we tackle that omnipresent question for carriers old and new: regulation. Regulation affects absolutely every part of the insurance business, from how customer data is held and used to how insurers reinsure themselves and invest the premiums they gather ...

The time and money cost of complying with regulation is often significant, with recent estimates suggesting that 10-15% of the total workforce in financial organisations is currently dedicated to governance, risk management and regulatory compliance.* The opportunity for greater efficiency here is so large that a whole new tech-powered industry – Regtech – has sprung up around it. And, with demand for regulatory, compliance and governance software expected to reach a massive 120 billion USD by 2020,* this is a space to watch.

Demand for regulatory, compliance and governance software is expected to reach 120 billion USD by 2020

The following stats and perspectives are taken from our Global Trend Map; a full breakdown of our survey respondents, and details of our methodology, are included as part of the full report, which you can download for free at any time.

Get your complimentary copy of the full Trend Map here ...

*sources given in full version of report


Assessing the Impact of Regulation

Regulation is a serious issue not just for (re)insurers but for the insurance ecosystem more generally. Out of all our survey respondents (unfiltered), 20% indicated that it had impeded progress 'a lot'. As we see from our our burden chart below, the impact is evenly spread across different ecosystem players.


Here, 24% of Brokers & Agents state that regulation has impeded progress ‘a lot’ within their organisation, along with 17% of Technology Partners and 22% of Insurers. The trend is the same when we use a weighted score (1 point for ‘a little’, 2 points for ‘somewhat’ and 3 points for ‘a lot’), giving us an overall ‘burden score’ of:
  • 186 for Brokers/Agents
  • 159 for Technology Partners
  • 175 for Insurers

While regulation is a concern for insurance companies across the whole globe, it manifests itself differently in different regions. Our stats suggest that regulatory burden is above trend in Europe and below trend in Asia-Pacific (in terms of respondents answering that regulation is impeding progress 'a lot'). Regulatory compliance certainly remains a daily issue in APAC but may, for structural reasons, be easier to deal with there on a ‘big picture’ level.

In Asia-Pacific, industry participants have the advantage of dealing, in the main, with large national markets (bigger than any US state, for instance) but without the complexities of an overarching regional regulator (like we find in Europe with the EU and Solvency II). That said, carriers wishing to be active across the region still have a multitude of different regimes to comply with.

Additionally, we asked survey respondents to indicate, via an open-text response, which regulations were currently the greatest cause for concern. There were too many responses to list everything but some that stood out were Solvency II and the Insurance Distribution Directive (IDD) from respondents in Europe, and the DOL Fiduciary Rule from respondents in North America.

"Currently the focus is on protecting personally identifiable information, personal health information and personal credit information. Regulations in the future may evolve, requiring companies to ensure that they are using information in a fair and just fashion. For example, much can be inferred from the data from an individual’s smartphone but it may not be fair and just to act on those inferences."

Cindy Forbes, EVP & Chief Analytics Officer, Manulife Financial

Get all the facts and stats by downloading the full Trend Map!


Regulatory Burden: A Growing Challenge

There is a marked trend towards rising regulatory burden, and we found this to be consistent across our different ecosystem players and regions.

89% of insurers and reinsurers believed regulation was posing a greater challenge to their organisations than during the previous 12 months…

‘Increased regulation’ was one of the external challenges we explored in our Industry Challenges section, coming in 6th place out of 12 (based on all respondents). Drilling down into different carrier departments reveals that its impact is not evenly distributed across the business: Increased regulation’ was among the top 3 external challenges for carrier staff working in ActuarialAnalyticsCapital Management (where it took the top slot), InvestmentRiskSenior LeadershipStrategy and Treasury.

The overall balance of these departments suggests the greatest burden from increased regulation within (re)insurers is falling on the investment and risk-modelling side of the business. Europe has certainly been a case in point over the past couple of years, with Solvency II subjecting carriers to more rigorous capital requirements.

Regulation’s growing prominence in the eyes of high-echelon staff (Senior Leadership) indicates just how seriously it is viewed within the ecosystem. This, along with the other measures we have presented in this section, creates a perfect storm for the rise of Regtech over the coming months and years.

In our next installment – the last of our 'Key Themes' – we look at trends in Product Development. Following on from our Key Themes will be our seven Regional Profiles, exploring on a geographical basis the stats and perspectives presented so far. As ever, please feel free to skip ahead and access everything straight away by downloading the full Trend Map here (it's free!).

For any inquiries relating to the Insurance Nexus Global Trend Map, this on-going content series or next year's edition, please contact:

Alexander Cherry, Head of Research & Content at Insurance Nexus (


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