June 13, 2014

Insurance Industry Best Practice for High Volume Customer Communications – Part 4 Legislative Requirements for Archiving

In the previous blogs around the Insurance Industry Best Practice for High-Volume Customer Communications series, we discussed an introduction into these best practices, legislative impact on document generation, and quality and personalization of customer communications. In this post, we are discussing the legislative requirements for archiving. Please enjoy!

Legislative Requirements for Archiving

On the one hand document generation processes produce more documents in ever more sophisticated ways, but on the other call centres and customer services teams need timely access to customer communications so that they can deal with customer queries and comply with regulatory requirements to store and access information.

The challenge is to automate the process of storing customer communication and make them readily accessible for compliance purposes and to customer services.

Document archiving is the process through which computer generated documents (created by document generation processes) are stored and indexed in document management systems. Document archiving solutions typically incorporate the ability to convert print data into archival documents and extraction processes to burst and index large print runs.

It is important to remember that 90% of the content volume which must be managed by insurers is produced by document generation systems and hence the same volume of information must be stored in document management by archiving systems.

Archiving and Records Management

A great example of the rules and guidance which determine the archiving requirements for insurers is to be found in the Financial Services Authority Insurance Conduct of Business guidelines in support of non-investment insurance related products. Areas of guidance relating to archiving are shown in the following list:

ICOB Refernce number and Summary

General Rules

2.8.1 Rules regarding ‘adequate’ records keeping

2.8.2 Inspection requirements by FSA

2.8.3 Time limits for FSA access

2.8.4 Generic documents

2.8.5 Method of storing records

2.8.6 Record retention periods

Financial Promotion

3.9.3 Reproducing accurate representations of documents

Product Disclosure

5.7.1 Record keeping

5.7.2 Generic document retention requirements

5.7.3 Record retention recommendations

Schedule 1

1.1 to 1.3 Recommended retention periods

Commentary on ICOB Rules and Guidelines and Relevance to Document Archiving

ICOB includes “Record Keeping” rules guidelines which include some stringent requirements for companies regarding customer documents. In particular it is incumbent upon the insurer to be able to reproduce communications produced over a period specified in the rules.

General provision of the rules require that a paper copy of the contract should be capable of being reproduced for the customer.

“During the course of a distance contract with a retail customer, the making of which constitutes or is part of a non-investment insurance contract:

(1) the firm must, at the retail customer's request, provide a paper copy of the contractual terms and conditions of the non-investment insurance contract; and…” (ICOB 2.7.1).

A particularly demanding area of the rules is the requirement for records to be accessible to the FSA within strict timescales.

“The records required in ICOB must be readily accessible for inspection by the FSA.” (ICOB 2.8.2 ).

”A record would be "readily accessible" if it was available for inspection within two business days of the request being received.” (COB 2.8.3).

Records may include both specific customer communications such as policy documents or generic documents where the following rules apply.

“Where a firm keeps standard, generic documents as records it should be able to identify which version, by date or reference number, was provided to the customer.” (ICOB 2.8.4)

Specific guidelines to cover the keeping of electronic records and focus on the fidelity of the retained record being an accurate representation of the original document:

“(1) A firm may arrange for records to be kept in such form as it chooses provided the record is readily accessible for inspection by the FSA.

(2) Where a firm chooses to maintain records in electronic form, it should take reasonable steps to ensure that:

(a) the electronic record accurately records the original information; and

(b) the electronic record cannot be subject to unauthorised or accidental alteration.” (ICOB 2.8.5)

A significant rule is ICOB 2.8.6 which covers retention periods and the need to substantiate that communications comply with content guidelines that could give rise to regulatory censure or claims sometime after the inception of the contract.

“Each rule in ICOB that requires a record to be made and retained specifies that the record must be kept for a minimum period of three years. A firm should consider retaining records for longer periods in case customers complain or take legal action against the firm. A firm should, in particular, consider what constitutes an appropriate retention period for records which relate to non-investment insurance contracts which may give rise to claims sometime after the inception of the contract (e.g. employers' liability insurance).” (ICOB 2.8.6)

Stay tuned for our next blog post where we’ll be looking at trends in archival for insurers.

Did you miss the previous parts of this Insurance archiving series? Catch up by following the links below:

Insurance Industry Best Practice for High Volume Customer Communications - Part I Introduction

Insurance Industry Best Practice for High Volume Customer Communications - Part 2 Legislative Impact on Document Generation

Insurance Industry Best Practice for High Volume Customer Communiations - Part 3 Quality and Personalization