Navigating DORA – What insurance providers need to know and how automation can drive compliance

The Digital Operational Resilience Act (DORA) has become a pivotal regulation within the European Union, reshaping the approach to digital risk management in the financial services industry. For insurance providers, DORA presents both a challenge and an opportunity: a challenge in terms of complying with new regulatory demands, and an opportunity to strengthen their operational resilience using modern technology.

Understanding DORA’s core requirements

DORA’s primary goal is to ensure that financial entities, including insurance providers, can withstand, respond to, and recover from all types of ICT-related disruptions and threats. This regulation goes beyond cybersecurity, encompassing a broader spectrum of operational resilience. The critical aspects insurers need to adhere to:

1. ICT risk management: Insurers must develop and maintain comprehensive ICT risk management frameworks. These frameworks should outline protocols for identifying, managing, and mitigating potential risks that could impact their digital operations.
2. Incident reporting: DORA mandates that significant ICT-related incidents be reported to regulatory authorities promptly. This ensures transparency and enables regulators to monitor potential systemic risks within the industry.
3. Third-party risk oversight: Insurance companies must ensure that their ICT third-party providers comply with the same resilience standards. This requirement is particularly significant as many insurers rely on third-party platforms for various digital services.
4. Operational resilience testing: Regular and thorough testing of digital operational resilience is required. This includes conducting penetration tests and simulating different disruption scenarios to validate the robustness of systems and response plans.
5. Governance: Senior management is directly accountable for overseeing and implementing compliance with DORA. This aspect underscores the importance of leadership involvement in digital risk management practices.

Challenges faced by insurance providers

While the examples above illustrate successful use cases, the journey to DORA compliance is not without its challenges:

• Complexity of implementation: Insurance companies must integrate DORA’s requirements into existing risk management frameworks, which can be complex and resource-intensive.
• Data silos: Disparate data systems across departments can impede effective risk monitoring and reporting.
• Cost of compliance: Implementing robust testing and resilience measures often requires significant investment, which can be a barrier for smaller insurance firms.

The role of automation in achieving DORA compliance

Automation can significantly alleviate these challenges and support insurance providers in meeting DORA’s regulatory requirements. Below are some key areas where automation proves invaluable:

1. Streamlined risk management

Automation enables continuous monitoring and real-time analysis of potential ICT threats. data sets, where manual analysis would be both time-consuming and error-prone. Modern cloud-based policy administration platforms, like Seamless which was built based on the shared responsibility model with AWS, where AWS manages the security of the cloud and Seamless manages the security in the cloud, include advanced data analytics and monitoring tools that help insurers identify risks in real-time. This capability is particularly useful for detecting anomalies in large data sets, where manual analysis would be both time-consuming and error-prone. This functionality supports the continuous ICT risk management frameworks mandated by DORA.

1. Efficient incident reporting

Reporting incidents manually can be burdensome and subject to delays. Automation can simplify this process by generating comprehensive reports based on incident data and ensuring they are formatted according to regulatory requirements. This not only speeds up the reporting process but also ensures accuracy and compliance. Policy administration platforms, like Seamless, can automate communication during incidents, ensuring that clients and stakeholders receive timely updates. This aids in transparent reporting, a key component of DORA. The platform also ensures client data is protected and accurately maintained, which is crucial for compliance during disruptions.

1. Continuous testing and monitoring

Automation facilitates regular testing of ICT systems through scheduled simulations, disaster recovery, thread-led penetration tests, and stress tests. Automated resilience testing ensures that systems are continuously vetted for potential weaknesses and that insurers can respond swiftly to disruption scenarios.

Benefits of digital transformation beyond compliance

While the primary goal of automation is to support compliance, the benefits extend far beyond regulatory adherence:

• Enhanced efficiency: Automating repetitive tasks reduces the burden on staff, allowing them to focus on strategic initiatives.
• Consistency and accuracy: Automated systems ensure that processes are consistently followed, reducing the risk of human error
• Improved customer trust: Demonstrating a strong commitment to operational resilience can enhance client confidence and loyalty.
• Scalability: Automation allows insurers to scale their compliance efforts as they grow, ensuring that expanding operations remain resilient and compliant.
• Proactive risk management: With automated monitoring and real-time data analysis, insurers can identify potential disruptions before they escalate into significant incidents.

DORA represents a significant evolution in how the insurance industry must approach digital operational resilience. By requiring comprehensive ICT risk management, third-party oversight, incident reporting, and more, it challenges insurers to rethink their operational strategies. However, with the right use of automation, compliance becomes more achievable, efficient, and sustainable.

Insurance providers that proactively embrace automation will not only meet DORA’s requirements but will also position themselves as leaders in operational resilience. In an industry where client trust and operational continuity are paramount, automation can be the key to building a robust, future-ready foundation.

Are you ready to embrace automation for DORA compliance? Let’s discuss how modern technology can transform your compliance approach and strengthen your operational resilience.

Seamless Insure is a cloud-native, adaptive, and easy-to-use insurance technology solution for complex underwriters and distributors to improve efficiency, compliance, experience, and customer satisfaction. Seamless is ready for DORA. Are you?