RegTech’s Race To Keep Up With The Flood Insurance Challenge

Extreme weather systems are becoming more common in the USA, and the impacts of that are being felt harshly by homeowners and insurers.

As Politico highlights, Storm Ian has financially ruined homeowners and created huge problems for the insurance firms that provide support to those homes.

Equally, the move of legislation to try and manage the flood risk is putting new strains on the regulatory system. While challenging, this is also an opportunity for regtech to put its foot down in an ever-evolving industry.

Understanding Water Damage Regulation

Water damage restoration is a long process but a relatively straightforward one. Homeowners are directed to shut off water supplies, use experts to take a holistic view of the home and make long-term changes to ensure the remediation of the property and its structure.

Where complications arise is in matters of insurance. As a recent FDIC press release and FAQ highlights, there have been huge changes to government legislation concerning the provision of insurance and the liability incurred by insurers and homeowners.

Understanding A Complex Regulatory Landscape

This rapidly changing landscape is hard to interpret but is also fertile ground for the proliferation of new regtech solutions. Any company that can harness the complex regulatory landscape will stand to benefit.

It is an arena where insurer liability, groundwater surveys, flood zone considerations, and the generally increased risk of inclement weather as a result of climate change all play a role.

Providing Solutions

According to Deloitte, the interface of insurance, regulation, and technology already promises to overhaul an industry – if insurers are willing to come along for the ride.

The disruption these technological changes will create is undeniable, but it’s also a significant opportunity.

Automation To Manage Regulations Is Key

When it comes to flood control and insurance, automation is key – ironing out the routine tasks associated with insurance and regulations will enable homeowners and insurers to stay ahead of the curve.

Furthermore, it will enable quality time to be spent by insurers at the value-added stages of assessment – a crucial benefit given that the frequency of storm events is reducing their ability to provide quality service.

Challenges On The Horizon?

In such a rapidly changing environment, the biggest challenge is, arguably, data ethics. The conversion to regtech-focused products already poses significant data ethics challenges.

In simple terms, where you need such huge ranges of data from consumers and you need to deploy it in an agile and rapid nature, you will inevitably find customer privacy concerns.

Regtech Solutions Will Help

Once again, having regtech in place to automate data collection and deployment steps is crucial. Using regtech solutions will help protect customer data and ensure that the right data sets are used correctly.

Meeting the challenge of data privacy while providing timely and flexible solutions is difficult in all industries, and that difficulty is multiplied in insurance. Unless extreme weather systems stop tomorrow, there’ll be an essential meeting of regulation, insurance, and tech.

Lavanya Rathnam

Lavanya Rathnam is an experienced technology, finance, and compliance writer. She combines her keen understanding of regulatory frameworks and industry best practices with exemplary writing skills to communicate complex concepts of Governance, Risk, and Compliance (GRC) in clear and accessible language. Lavanya specializes in creating informative and engaging content that educates and empowers readers to make informed decisions. She also works with different companies in the Web 3.0, blockchain, fintech, and EV industries to assess their products’ compliance with evolving regulations and standards.

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