The Digital Operational Resilience Act: The Impact to Life Claims

With the growing risks to operations at financial institutions ranging from pandemics to cyberattacks, the European Union (EU) has moved to ensure that critical functions at insurance companies remain operational. Effective mid-January 2025, the regulations in the Digital Operational Resilience Act (DORA) – will govern this issue for insurers in the EU and for the UK (if their organisations trade in the EU).  

Life claims as critical payments under DORA 

One key function being examined in the regulation is the ability for financial institutions to maintain payment operations and services to customers. Life insurance companies should take heed: critical payments face scrutiny similar to banking payments under DORA. 

In this context, payments for products under the life claims umbrella will be considered critical payments. This will include claim payments for products such as income protection, serious illness, personal accident, death benefits etc. That places life and health insurers under an urgent countdown to comply.   

Manual claims processing poses resilience risks 

The key questions that life and health insurers operating in the EU will be forced to ask themselves are: What is the operational resilience risk of our claims and payments operations, and will our claims operations comply with the DORA regulation? 

It is not just about the risk of an external rogue cyberattack. Over many years at FINEOS right up to the present, we have seen claims departments run from file-shared spreadsheets where benefit calculations are done manually and re-keyed into error-ridden payroll systems. We’ve seen heavy reliance on paper files and stressed claim handlers focused only on getting the monthly pay run deadline completed. How will these organisations demonstrate, through the test cases, a required level of operational resilience expected by the upcoming regulation?   

Cloud-based claims technology answers DORA 

There is a better way. Using purpose-built FINEOS Claims, we see a world of automated payment calculations, claim handlers focusing on claimant recovery and return-to-work strategies. A world where technology supports customer care, and where instant information is delivered efficiently to the handler or to the claimant through a digital portal. Insurance companies that use FINEOS Claims today enjoy the benefits of robust and secure operations through market-leading cloud-based claims technology. This is essential criteria to support the new DORA regulations. 

A proven platform for claims management 

If your claims operations use manual processes wrapped by shadow IT with single points of failure, mainly in spreadsheets or paper-driven – will this pass the DORA regulations test cases and ensure that your organisation is not subject to expensive and public fines for breaches of regulation? 

The FINEOS Platform, powered by AWS, delivers operational and security strength to the highest levels and calibre. Globally, the FINEOS Platform processes over 4 million new claim cases every year.  That translates to claims managed on the FINEOS Platform paying out over €6B annually to our customers’ customers through a mix of one-off lump sum payments and recurring regular payments. The solutions include FINEOS Claims as well as FINEOS Payments, providing an integrated approach that can process complex payments with automated and auditable financial movements.   

DORA will be officially in force early in 2025. There is a window now for insurance companies operating within the EU to demonstrate to regulators that they have commenced initiatives that will deliver strong operational resilience in their organisation. Contact us to discuss how FINEOS can provide a secure solution.  

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