A Deep Dive into F&C Regulatory Compliance

Financial and compliance (F&C) is one of most common corporate buzzwords, but F&C is so much more; the regulation and enforcement of capital markets rules and standards helps maintain investor confidence and industry transparency. Special guest Sharlea Taft, Sapiens’ NAIC Liaison, joins Julie Kramer, Sapiens’ Vice President of Financial & Compliance, for an in-depth discussion of F&C and its role in today’s insurance sector in this week’s podcast.

Julie Kramer|Sharlea Taft

Julie Kramer: Hello, welcome to the Sapiens Insurance 360 Podcast. I’m your host, Julie Kramer, Vice President of Financial & Compliance at Sapiens, and I’m so glad that you’re out there listening. This is where we discuss the latest news, trends, and issues from across the insurance solutions and technology spectrum.

Practically everyone in the worlds of accounting, finance, and insurance is familiar with the terms “financial and compliance.” The terminology has even made its way into disciplines above and beyond its traditional scope. These days, financial and compliance (F&C) is not just about following the rules, it’s about building confidence among investors and customers that companies are doing more than checking proverbial boxes. Failure to comply with F&C regulations can result in financial penalties, litigation costs, and reputational damage that can be hard to recover from. But what exactly is F&C and how can handling F&C challenges properly make a difference to your company’s bottom line?

Here to help us answer these questions and more is Sapiens’ own Sharlea Taft, NAIC Liaison for Sapiens. Sharlea has 20+ years in insurance and regulatory experience working with insurance companies and securities filings. She holds an MBA and has a Professional in Insurance Regulation from the NAIC, the National Association of Insurance Commissioners.

Sharlea, thanks so much for joining us on today’s program, “A Deep Dive into F&C Regulatory Compliance.”

Sharlea Taft: Thanks for having me, Julie. Happy to be here!

Julie Kramer: So Sharlea, why don’t you first talk to us about your role here at Sapiens. What exactly does an NAIC liaison do?

Sharlea Taft: My elevator speech for NAIC Liaison is that I coordinate the information from the NAIC for Statement Pro, the development team, and then I provide training and resources for our customers. If somebody’s interested in a little bit more than that, I specialize in understanding statutory accounting, which is specific to insurance companies, and I regularly do webinars and in-person presentations on both NAIC updates and statutory accounting, and I’d love to encourage organizations to reach out to me for their next event. I do a lot of those and provide a lot of technical information on the statutory accounting side.

Julie Kramer: Thanks for that, Sharlea. So talk to us about regulatory compliance and insurance, the need for it, and its purpose.

Sharlea Taft: Well, for some perspective, the NAIC was founded in 1871. Insurance has been around for a very long time in all different forms, and the NAIC works as a standard-setting organization. It’s not a federal regulator or any type of regulatory organization. Basically, the NAIC coordinates all of the states and the state insurance commissioners come together to work through a process to update their own laws and regulations, and that’s where the statutory compliance of things kind of comes along. It does include some international areas and some review that NAIC works to provide data analysis for insurance commissioners to regulate the industry, and it kind of ends up being like a Congress for insurance commissioners, and that’s how the model laws and best practices get changed for each state.

The regulatory compliance comes down to where the statutes and regulations get updated for insurance companies, the standards that they get held to, and how they resolve the issues with the regulation of insurance companies. And it’s important for our clients and companies to have a strong internal compliance process for that data and not just the financial records and statements that get submitted to the NAIC. And we try to update our information on our StatementPro solution through the Lifeline website, as well as coordinate some of the state information and provide that through the state compliance manager module.

Julie Kramer: Great. Thanks for that context, Sharlea. So to take this topic a little further, how do the regulatory processes work and are they helpful to insurers as well as customers, brokers, etc.?

Sharlea Taft: There’s a ton of information out there and to be helpful to our clients and customers, we try to coordinate the data that we present with updated news and events for the rules and regulations that get established within states to control insurance operations. How it works is the commissioners coordinate that information and provide it through their websites. The NAIC has a ton of task force working groups and committees and kind of works on a regulator side where they have private meetings and translates into the public meetings where industry is allowed to provide some feedback. I spend a lot of time on the statutory accounting side of things to understand the updates that happen throughout the year and how that translates into the financial statements and the blanks that get submitted to the NAIC by each customer. You can get a ton of that information. It’s a little overwhelming on the NAIC website. I can help you with that, but we also provide updates regularly on our internal website through Lifeline with our StatementPro product.

Julie Kramer: Brilliant, Sharlea, thank you. Now, are there any particularly newsworthy issues in the F&C compliance market today that consumers should be aware of?

Sharlea Taft: Yes. Some of the current hot topics for this year are a lot of the blank changes that have happened through the statutory accounting principles working group. They’ve had a Bond project is what they call it, and it’s been kind of building up through the last couple of years, and a lot of the items will become effective for year-end 2024. We have regular monthly summaries of the meetings that are available on Lifeline, and then we are also going to do some webinars and additional training this year on the Bond project, but you might want to look into that because it will impact your year-end statements this year.

Julie Kramer: Thanks so very much, Sharlea. One final question: how is this information relevant and helpful to Sapiens’ customers going forward?

Sharlea Taft: This is vital. It is really important to stay current on statutory accounting guidance through the year as it changes, because it does impact the changes to the statement blanks and the individual schedules where, for example, that Bond project, some of the definitions and items are going to change where you place the data investment items on your statement. We’re going to do some additional training and pop-up webinars, those reference documents that I spoke about earlier that are available on Lifeline. We regularly update those and give you the latest information on Lifeline this year. There’ll be an additional session as well at the Sapiens NA Summit this fall.

Julie Kramer: Thanks, Sharlea! You’ve really demystified a lot of important information for us today, and I personally can say that I’ve really learned a lot about this critical topic. And for our listeners, as always, thank you so much for spending your time with us today. We love hearing from you, so if you have comments or would like to follow us on social media, please reach out to us on our channels and don’t forget to subscribe to the podcast. We’ve got more coming, so stay tuned to Sapiens Insurance 360!