Haselfrë
Integrated Governance | Risk | Compliance
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Areas of Concern for Insurance Companies
Arising from the new investment regulations, the areas of concerns for insurance companies are as under:
Understanding the New Investment Regulations of IRDA
1. Understand what the new investment regulations mean for operational activities of the insurer
2. Determining the processes that need to change within the company for effecting new regulations
3. Crafting an Actionable roadmap to comply with the new regulations in time
4. Ensuring compliance in a systematic manner and on a continuing basis
Increased cost of compliance through IT and other measures
1. Understanding the implications of IT spend on additional compliance initiatives
2. Ensuring higher return on investments from IT
3. Ensuring timely compliance within moderate budgets, and schedule
Internal Controls
1. Pinpointing processes that are affected by new investment regulation
2. Identifying areas within processes that require internal controls
3. Managing process level changes for effecting internal controls
4. Ensuring satisfaction of various stakeholders for ongoing compliance
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Areas of Concern for Insurance Companies
Risk Management
1. Identifying new risks arising from separation of shareholder investments and policyholder investments
2. Understanding the implications of new investment policy on SH investments (as it is POI independent and
carries higher risks and rewards)
Need for increased customer service capabilities
1. Understanding how to establish trust with the policy holder when competition is stiff
2. Understanding how to build on the existing customer base to generate more business
3. Creating an actionable roadmap to ensure brand loyalty and lower customer dissatisfaction
Extending Distribution and effective Channel management
1. Understanding new ways of reaching the end customer (policy holder)
2. Ensuring effective communication to policyholder on additional protection of their investments
3. Ensuring transparent communication to end policy holder
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Concerns of Indian Regulators
Reforms concerning asset management have come under the increasing gaze of the regulators in India. For the
first time, these have been considered holistically to cover the requirement of Act and Regulations, keeping in
view the growth of investments and its trend as well as the key regulatory and operational concerns. Organiza‐
tions thus have more pressure on them to have “integrity‐driven approaches to self – regulation to ensure a first
mover edge in creating their own regulatory systems.
CONCERNS OF REGULATOR, PERCEIVED FROM RECENTLY AMENDED INVESTMENT REGULATIONS
1. Delay in filing periodical returns leading to improper regulatory information in monitoring insurers
2. Wrong submission of data, that could lead to misleading regulatory information
3. Poor IT setup leading to Data integrity issues
4. Segregation of Investment functions into Front, Mid and Back Office leading to internal control and related
reporting issues
5. Internal / Concurrent Audit of investment operations
6. To have an integrated Database
7. Periodical reconciliation of Custodian and Insurer books
8. Valuation inconsistencies of different Funds
9. Compliance to Exposure Norms in placing Investments
10. Eliminating use of Spreadsheets for Internal / Regulatory Compliance
11. Automatic tracking of ‘Approved’ / ‘Other Investments’ to address dynamic nature of Investments
12. ULIP business Investment parameters / disclosure to address policy holders benefits
13. Confining Outsourcing of Investment activities, only to startup companies in the process of developing ‘in‐
house’ expertise
Further to the above, the Insurance Act requires ‘Assets’ to be held free from ‘encumbrance’, whereas the Regu‐
lations require compliance to (1) Pattern of Investment, (2) Exposure Norms (3) Prudential Norms.
These requirements require ‘automatic tracking of ‘approved’ / ‘other investments’ status to be done through
system on a dynamic basis. Basically, more than the static reports that are received as of date, the regulator
would like to move to a dynamic status reporting in a phased way.
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How can Haselfrë help?
For all organizations engaged in activities that come under the control of a regulatory body, Haselfrë provides
support, and advice to help you manage your regulatory risks and obligations. In an ever‐changing regulatory
environment, we help ensure that you identify, manage, and control any existing and future regulatory risks.
A proactive rather than a monitoring approach to regulation is now a full time strategic necessity. We assist you
in creating a self‐regulatory platform that will enable you to create a holistic approach to performance and
conformance.
Our teams consist of experienced regulatory risk specialists, including ex‐regulators, who not only have designed
but also know the rules, and have also, implemented and assessed compliance against them. Our people can help
you at the strategic level — by maximizing any competitive advantages from regulation through to the
operational level and by minimizing the costs and disruptions to your business, thereby freeing up management
time in the process.
Haselfrë's experts assist corporates to:
 Understand the implications of the new regulations
 Estimate the financial impact of core non financial compliance risk indicators
 Make them compliant to the new regulations through:
 Documenting extant Systems and Process of Investment Operations
 Aligning extant Systems and Process against New Investment Regulations
 Identifying gaps and prioritize to achieve compliance and governance
 Crafting an ’Actionable Roadmap’ for compliance as per the new investment regulations
 Assisting in implementing the action plan with appropriate governance mechanisms
 Providing certification once a quarter as required by legislation that the processes and systems
are fully compliant (AMC model)
 Implementing the solution suggested in the roadmap through Haselfrë KonformTM—product that
ensures ongoing compliance for the insurer
Handhold the organization to keep their compliance programs updated with changing regulations as well as intro‐
duce integrated governance mechanisms for decision making.
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About Haselfrë
Haselfrë is a niche, cutting edge, consulting organization (ISO 9001:2000 certified) that focuses on the problem
space of e‐Government (Federal, State & local), and iGRC (Integrated Governance, New Gen Risks, Conformance
and Performance) for specific verticals in the public and private sector. Its strategic domain knowledge for
Government, Insurance and Financial Services verticals; use of inter‐disciplinary and outcome based approaches
in its engagements; and cutting‐edge frameworks such as the Sustainable Balanced Scorecard (made operational
through Six Sigma methodologies) has been its USP. Examples include:
 Governance & Compliance consulting for ING Insurance (Europe) for introduction of complex Variable
Annuity products in the developed markets of European Union using new and untested strategies
based on the Freedom of Services Act of EU. This involved working in close association with the
Executive Board and C‐Level executives from the time the strategy was drawn, assessing risks such as
‘Black Swan’ risks and ‘Principle based’ risks, for which there were no past precedence or data and
recommending practical steps for compliance and integrated governance
 Crafting the first ever e‐Government Data elements dictionary and Thesaurus for the Government of
Andhra Pradesh as a prelude to the conceptualization, design and development of the
Inter‐operability layer for the State (named Unifië‐X) using which more than 100 services from several
Government Departments and Public utilities, were accessible through their Citizen friendly e‐Seva
centres. All these were done in 2003, when the standards in these fields were not frozen and the
hype about SOA had not even begun! (See the Government Order to this effect from the Government
of AP site). It may be mentioned, that replication of this effort throughout India, using the National
Institute of Smart Government has met with little success, even after 5 years of effort.
Haselfrë addresses the need of transparency, accountability, performance, effectiveness and efficiency through
integrated governance initiatives, where ‘Execution is the key’. We use the best practices learned from our
extensive experience with various public enterprises to enable private enterprises navigate through the changing
and uncertain landscapes through sound governance, compliance and risk mechanisms. It is this approach that
we call Integrated Governance. In doing so, Haselfrë constantly strives to promote ‘Balance between
Performance and Conformance’.
Haselfrё is a partner of The Institute of Chartered Accounts in India for crafting and delivering the executive development program for top
management of insurance companies and reputed charter accountants on process re‐engineering issues consequent to the drastic reforms in
Investment regulation cycle brought about by the IRDA. The focus is on approaches to finding the right balance between performance and
conformance. The first such program is expected to be held in February 2009.
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CONTACT US
Haselfrë Solutions Private Limited
211 Hans Bhavan,
# 1, Bahadur Shah Zafar Marg
New Delhi 110002
India
Phone: +91 98840 71120
Email: contact@haselfre.com
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Haselfrë Solutions Private Limited, 211 Hans Bhavan,, # 1, Bahadur Shah Zafar Marg, New Delhi 110002, India