Compared to most other business sectors, the insurance industry is tightly regulated — and for many good reasons. Most people rarely interact with their insurance company until something happens: a fire, a wreck, or perhaps a complicated healthcare situation. 

Insurance professionals already know that competition in the insurance industry is cutthroat, so customer interaction has to be swift and uncomplicated, without time-consuming duplicated forms and other trappings that block the customer from reaching his or her goal: a settlement payout.  Meanwhile, insurance firms amass huge troves of sensitive data about their customers: financial information, healthcare data, employment histories, and much more. 

To protect the privacy of clients and regulate how insurance providers may (or most likely, may not) share consumer information, the insurance industry is heavily regulated. Federal agencies like the Center for Medicare & Medicaid Services (CMS)  issues strict regulations for health insurance providers, to which compliance is essential. To make things even more complicated, insurance companies are also regulated by individual states — and regulations can vary from state to state, making it all somewhat confusing. The National Association of Insurance Commissioners (NAIC) does set many model standards that apply across state lines, but staying in compliance with the many different regulatory entities can feel overwhelming. 

On top of that, insurance companies have to comply with cybersecurity rules and regulations to protect sensitive information against data breaches and hacking. If your insurance business also has to comply with the Health Insurance Portability and Accountability Act (HIPAA) regulatory compliance takes on another level of scrutiny both internally and externally. Non-compliance even for brief moments can lead to costly remediation work.  

For those who work with HR and employee benefits, complying with healthcare insurance regulations for employees is important, yet also complicated. It requires lots of staff time, especially during onboarding of new employees, and a sophisticated management system to ensure that each employee is covered by the correct healthcare plan. Companies also have to confirm that the healthcare plans they offer meet legal requirements in multiple jurisdictions, since state and federal regulators have a say in how insurance should work.

Modern insurance compliance software simplifies those challenges and smooths the path to achieving regulatory compliance. Using automation and artificial intelligence (AI) compliance management software will streamline the insurance compliance process while protecting sensitive information at the same time.

Here are some of the benefits for insurance companies that use compliance management software: 

  • Streamline internal workflows
  • Eliminate time-consuming manual systems prone to human error
  • Avoid penalties and fines resulting from non-compliance
  • Efficient use of insurance tracking software to help the business process 
  • Easy integration into risk management systems already in use
  • Real-time updates as regulatory demands change

Why compliance matters to the bottomline 

Not being in regulatory compliance can quickly become very expensive both for insurance companies and other businesses. 

Penalties for failure to comply with HIPAA include fines and even the potential for prison time. According to HIPAA Journal, there are four tiers of HIPAA violations with Tier one being the lesser violation: 

  • Tier 1: a violation that the organization was unaware of and could not have avoided. 
  • Tier 2: a violation that the organization should have been aware and could have avoided.
  • Tier 3: a violation that is the direct result of willful neglect of HIPAA rules, but the organization did try to remedy the problem. 
  • Tier 4: a violation that is the result of willful neglect and no one tried to make the situation better. 

In 2019, fines ranged from $117 for Tier 1 to $58,490 for Tier 4 for each violation, with maximum penalties ranging around $1.75 million per year. 

The complete list of fines is published by HIPAA journal and adjusted for inflation every year. 

Other regulatory entities can fine non-compliant insurance companies and businesses as well:

  • OSHA fines run up to tens of thousands of dollars per incident and can result in a business or construction site being shut down temporarily, losing hundreds of thousands of dollars on a project. 
  • Affordable Care Act (ACA) and Fair Housing Act violations also cost in the thousands of dollars, especially if they repeat. Fair Housing Act fines start at $16,000 for the first violation and grow exponentially if more violations are reported within a seven year period. 
  • Manual insurance compliance systems built in spreadsheets and on shared drives are notoriously difficult to work with and search.
  • Your compliance team and risk management staff wastes time trying to maneuver paper-based systems looking for answers that compliance software can produce at the stroke of a button. 

Things to keep in mind when choosing a good insurance compliance solution 

Modern insurance compliance solutions feature high functionality, and the software solutions are flexible and configurable, so installation is a straightforward process. 

Look for built-in templates that make it easy to configure the new system to match your business processes and industry. Make sure the insurance compliance software offers full-service onboarding of your staff and instruction (like webinars) as needed. Ideally, your technology will even offer self-service functionality for some subjects, allowing employees to answer common HR and insurance questions they have themselves. 

Insurance compliance management tools

As you forge a path for your business while managing compliance and risk on multiple levels, many tools can help keep your business stay competitive while keeping cybersecurity and compliance as top priorities. 

ZenGRC’s compliance, risk, and workflow management software is an intuitive, easy-to-understand platform that not only keeps track of your workflow, but also lets you find areas of high risk before those risks manifest as real threats. 

Worry-free compliance management is the Zen way. For more information on how ZenGRC can enable your CMS, contact us for a demo.