Validating and Quantifying the Qualitative Elements of Customer AML Risk in the Insurance Space

Louis A. Parris, CAMS-Audit, Dip(Compliance) FICA; Certified Professional

Regulation in the insurance space has tended to lag behind the more aggressive regulation of banking and other financial institutions. As a result, risk modeling for the insurance industry has not been as comprehensively developed. Examination of existing rating models indicates that there are generic models, which insurance companies adapt to their own use. Moreover, the qualitative aspects have largely been used in preference to a more demanding application of the quantitative method. Even where regulators suggest models, these have tended to be driven primarily by qualitative inputs.

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