A consortium of six of Australia’s major providers of general insurance has inked a multi-million dollar contract with IBM Corp. to deliver the industry’s first centralized electronic compliance Hub.
The Hub was developed to comply with the Financial Services Reform Act (FSRA) and is a collaborative effort between Allianz Australia, CGU, QBE Mercantile Mutual, NRMA, MTQ, GE Insurance and the Insurance Council of Australia (ICA).
Under the FSRA insurers, which report to the Australian Securities and Investment Commission (ASIC), have to meet an unprecedented level of customer disclosure requirements.
Insurance agents must disclose to customers what products and services they are authorized to provide and any commission or incentives they are receiving from insurance companies.
IBM, together with Axe Group, jointly built the online service technology in time for the March 2004 deadline.
Initially, the service will be used by around 10,000 insurance agencies and their agents Australia-wide and allows for 24×7 real-time FSRA compliance data information, automatic reporting to ASIC and a Financial Services Guide for customers.
The Hub is being delivered as a user-pays service so insurance companies can avoid paying up front for computer hardware.
As demand for the Hub increases, IBM will simply ‘turn on’ extra capacity without the consortium needing to buy more computers to manage the increased load.
Allianz Australia’s Group FSRA project manager Matthew Chee said the Hub eliminates duplication across companies and agents and is expected to reduce administrative processing costs by 50 per cent.
Because the Hub automatically uploads data to ASIC, Chee said hundreds of hours of manual labour have also been eliminated.
Axe Group CEO Kimberley Lathe said the Hub is an example of how an industry can quickly respond to regulatory requirements.
The service is hosted on a Linux Virtual Server, running on an IBM z-Series mainframe in the IBM data centre. Axe Group has built and will support the application, which was developed using its ‘axelerator’ business automation platform. The Axe Group application is built on IBM’s DB2 database and WebSphere application server. It uses Tivoli software for security.