Are you DDO ready?
Finity’s Leanne Angell has compiled her top ten tips to follow when preparing for Design and Distribution Obligations legislation:
- Start with the purpose in mind and revisit it whenever you get stuck. The Regulatory Guide is a good start, outlining what you need to do under the Design and Distribution Obligations legislation, but there will be times when you are left scratching your head. At those times, revisit the purpose of the legislation: “Improve consumer outcomes through better product design and distribution practices”. You'll be on the right path if you keep that purpose in mind.
- Take a customer centric approach. When preparing your Target Market Determination, think like a customer, or consider what you would tell your mum if you were selling the product to her. You know your business (and customers) better than anyone, so write the TMD for humans, not robots.
- Don’t just tick the compliance box, improve your business. Review your PDS, compare cover to your competitors, check your quote and bind process, critically evaluate what’s good and what’s not. There’s a good chance fixing the bad parts will reduce your compliance risk and improve your business - so use the regulations to justify the changes. And if you rely on manual processes, go digital!
- Align organisational, customer, & compliance goals. Minimise the risk of conflict between your organisation’s goals and the purpose of DDO by making sure your organisational plan includes customer and compliance objectives. Give your business the chance to build the right culture.
- Develop good relationships. You will reduce a lot of the pain by encouraging cooperative relationships between issuers and distributors and all the other entities responsible for delivering the right customer outcomes. Leveraging the capabilities of each party will get you across the finish line with less pain.
- Train your people and assign clear roles and responsibilities. With change comes uncertainty and stress. Give your people the supporting tools they need and allocate plenty of time for them to learn and prepare. Explain the ‘why’, not just the ‘what’ and execution will be smoother.
- Use whatever data and information you have available. You may be surprised at how much you know about your customers, your products and your business performance. It just might not be collated in a way that makes it easy to find, organise and communicate. It will never be perfect, there will always be more data than you can possibly manage, but it can be a treasure trove. Use it for reviewing your products and preparing for DDO and invest time in getting your data and reporting processes in order. Aim for an effective and efficient data collection and reporting process, not perfection.
- Document everything. That’s easier said than done. Documentation is rarely the favourite task, but there are lots of good tools around that make it easier to create, share and revise your documentation. DDO requires better documentation than you’ve probably ever had so embrace the requirement, keep your documentation up to date and see how much easier it is next time you need to change a process or system, or train new people.
- Prevention is better than cleaning up the mess when something goes wrong. A lot of the tips in this article will help you improve your business, not just prepare for DDO. You will see risks that could result in a breach (or poor customer outcomes) but you can’t fix everything. Prioritise what needs to be done, focusing not just on reporting what goes wrong, but preventing it from happening in the first place. Identifying customers impacted by a historical breach and remediating the situation is very costly. People costs, distraction from business as usual activities, premium refunds, reputational damage, sales, additional regulator focus and fines, can all stem from one oversight in your planning and execution. Identify those situations where a customer outcome is more likely to go bad and fix it – it is likely to cost less in the long run to prevent a poor outcome than trying to remediate.
- Keep calm! Everyone is in the same boat so don’t let regulatory fatigue pull you down. Insurance can be complex, but it is a key tool for keeping our society and economy healthy and developing. It can take time and ingenuity to find the right solutions, but it is worth persisting to get it right.
For more information about preparing for DDO or other regulatory changes impacting your business contact: