Continued regulatory commitment regarding IDD improving transparency in many dimensions
The Insurance Distribution Directive – IDD went in force in Sweden October 1st 2018. Itello and our customers discussed how to interpret the law and implementing the support in a collaboration project during 2017 and 2018. One area of concern was how to gather information from the many fund managers and their funds. Another critical area is handling of fees when migration policies to Inca. Since many of our customers are migrating from bespoke legacy systems, we decided to initiate a new collaboration project regarding how to review the reporting, according to IDD.
Initiating this new and reflecting collaboration project will review the implementation of the functionality and analyse the need for aggregation and distribution of information regarding fees to ensure IDD compliance. The analysis is of high importance when customers digitise the whole value chain.
Itello delivered functionality to support the implementation in two releases of Inca; ex-ante information in Inca 17.3 providing support for predicted fees. Ex-post reporting supporting required data to the yearly statements delivered in Inca 18.3.
When the regulation went in force October 2018, there were still some remaining questions to address that were urgent for our customers, especially regarding information regarding fees relating to funds.
Since then, some of the uncertain areas has become clearer, and therefore a package of improvements was included in Inca 19.4 (e.g. better interpretation of the plethora of different ways the fund companies’ present ex-post information).The information of the fees is distributed with Inca Connectivity Framework to different recipients such as internet portals, tied agents, brokers and to printing facilities for yearly statements via the Customer Communication Manager in Inca.
Improved transparency regarding mutual fund fees and product fees
The purpose behind the IDD regulation is to strengthen the power of end clients by providing information regarding the fees they pay and to whom. To be compliant, our life insurance companies need to aggregate information from both Policy administration systems such as Inca and the fund companies.
Fund companies provide NPV of each fund to the life insurance companies excluding fees such as; ongoing, upfront, redemption, high watermark fees, for distribution. Therefore Itello has developed an integration with Morningstar to retrieve fund costs and all fees. Furthermore, the data model in Inca has been extended to store the values and to calculate predictive costs based on the fee structures for individual holdings.
Through this solution, our customers are provided with a complete solution for presenting IDD information to the insured.
Migrations from multiple bespoke legacy systems drive additional needs to comply with IDD
Today our customers handle ex-post reporting over 12 million policies already in Inca and ex-post for all newly issued policies. Our customers identified a need for reducing the complexity of reporting ex-post for the policies we have migrated. During 2019 we will migrate over 550 000 policies in several migration projects from multiple bespoke legacy systems as well as from several customers.
Our response propels our customers' digital transformation
The response we identified is to migrate the accrued fees at the time for the migration. A daunting task, but when reconsolidated with the legacy system, our customers can use the processes and functions in Inca for reporting according to IDD and exposing the information using Inca Connectivity Framework.
Our implementation of IDD in Inca enable our customers to propel their digital transformation by migrating from multiple legacy systems.