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Ensuring compliance with best practices to mitigate risk has always been one of the greatest challenges for insurers. Therefore, for insurers, 2012 comes with possible economic and political instability. This makes it top priority to meet challenges head-on.

Challenges for 2012

The main challenges insurers will face include:

• Social Media: The role of social media is increasing in every part of daily life and business. The same is the case with insurance. Now, social media has direct influence on insurers. Successful insurers have learnt to make the most out of advertising and marketing on social media networks. Therefore, there are potential guidelines for insurers using social media for best practices. These guidelines have been published by the FINRA (Financial Industry Regulatory Authority) and the NAIC (National Association of Insurance Commissioners).
  According to these regulatory bodies, insurers will be responsible for ‘static content’ (content or communication via websites for advertising on social media). The content must be in compliance with existing rules about advertising.

• Electric Data: Data breach has become too rampant in recent years. This has led to legal actions against numerous companies operating online. Therefore, new laws and standards have been established to regulate data privacy. The SEC issued new guidelines about information that companies must disclose to the public. These are meant to ensure mitigation of data security risk through best practices.
  In 2011, the Obama administration enacted cyber security legislatures for 46 states in the US. In 2012, there will be more states added to the list.

• U.S. Trade Policies: The OFAC (Office of Foreign Assets Control) prohibits companies in the US from engaging in business with some countries. These are referred to as “Specially Designated Nations.” The list continues to change, but countries like Iran are part of the list.
  In 2011 many insurers and reinsurers were penalized for failure in compliance with this best practice.  Personnel regulating corporate compliance are expected to note that, OFAC has authority over all state insurance regulations. This authority has been derived from the President’s declaration. The Treasury Department will continue to monitor US Trade policies through 2012 to ensure best practices.

• Accounting Standards: There will be new accounting standards in compliance with best practices of the IASB (International Accounting Standards Boards) and FASB (Financial Accounting Standards Board). The Convergence Project will help to improve and simplify the financial reporting system for insurance contractors. In 2012, IASB and FASB will work together as a team.

• Surveillance via Insurance Industry: Some automobile industries have started to use GPRS tracking devices to keep track of their employees. Likewise other automobile insurance companies have thought about implementing the use of trackers. There is a possibility that there will be legal consequences for invasion of privacy. Insurers are expected to ensure compliance with new regulations regarding trackers coming up in 2012.

Insures must prepare themselves with best practices to face these challenges in 2012.

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