The Hidden Costs of Manual GL20 Compliance (And How to Avoid Them)

Let’s face it – when GL20 regulations first landed on insurers’ desks, many thought: “We’ll just make do with what we have.” Spreadsheets, shared drives, endless email threads. But what was meant to be a temporary solution has now become a permanent headache.

Manual GL20 compliance isn’t just a bit inefficient – it’s a drain on your time, money, and peace of mind. It’s the hidden costs that sneak up on you and make life a lot harder than it needs to be. And the reality is, those costs add up faster than you might think.

This blog dives into those hidden costs of relying on manual systems for GL20 compliance and offers practical ways to avoid them. The key? Moving toward automation and smarter, more efficient compliance tools.

The Hidden Costs of Manual Compliance

Insurers have historically depended on manual tools such as email chains, shared documents, and spreadsheets for compliance. While convenient in the short term, these solutions are littered with inefficiencies, mistakes, and dangers that compound in a hurry. Let’s explore some of the less apparent costs of having manual GL20 compliance.

1. Labor-Intensive Processes and Human Dependency

Imagine this: your risk team spends 62 days per year – that’s three whole months – just tracking down compliance documents. Work like documenting controls, performing risk assessments, and preparing for audits requires constant effort and human touch. And it all mounts up.

• Labor Costs: Your employees end up spending hours tracking down, validating, and cross-checking data. The manual review process is prone to errors, and each audit requires significant administrative work.
• Inefficiency and Delays: When compliance tasks depend on human intervention to track status, manage policies, and generate reports, delays are inevitable. This is especially risky when audits or regulatory reviews are looming.
• Impact: Over time, this eats into valuable business time, pulling focus away from innovation, client relationships, and new products, all while increasing labor costs.

2. Increased Risk of Errors and Inconsistent Reporting

In a world where even a single typo can have serious consequences, manual compliance processes can introduce errors that are hard to spot until it’s too late. Picture this: one insurer missed 17 critical security points due to a single spreadsheet error. Only after a breach did they realize the mistake.

• The Hidden Cost:
  Inaccurate data and inconsistent reports can lead to audit failures. Missed tasks, incomplete evidence, or wrongly marked control updates could mean penalties, the loss of certifications, or even reputational damage.
• The Impact:
  The fallout from errors doesn’t just cost you in fines – it can damage client relationships, erode stakeholder trust, and, in the worst cases, lead to lawsuits.

3. Lack of Real-Time Compliance Visibility

Manual systems don’t provide you with a current, real-time picture of your compliance standing. Rather, insurers tend to depend on reports done at intervals and manual verification in an effort to keep up. That can leave gaps in the detection of risk, particularly in a situation where timing is critical.

• The Hidden Cost:
  Without real-time monitoring of compliance, it’s easy to overlook initial signs of risk. If there’s a breach or a compliance issue, you might be too late to avert serious harm.
• The Impact:
  When your response is delayed, you drive up recovery expenses, open your business to penalties from regulators, and risk injuring your reputation. Threat management is proactive, so it is a struggle, with you scrambling after things go wrong rather than averting them.

4. Audit Preparation Delays and Increased Costs

Compliance means lots of paperwork, and when audit time comes, it’s not uncommon to find yourself scrambling to collect all the necessary documentation. With manual compliance, you’re more likely to encounter last-minute problems as you try to compile everything into a neat and presentable format.

• The Hidden Cost:
  Staff spend weeks (if not months) manually cross-referencing compliance data, dealing with incomplete records, and chasing after missing evidence. This delays the audit process, increases consultant fees, and raises the risk of missing important deadlines.
• The Impact:
  Audit preparation becomes a major stress point. Overworked staff, rising consultancy costs, and the constant threat of missing critical documents means the audit process becomes a bigger hurdle than it needs to be.

5. Scalability Challenges and Business Growth Constraints

Compliance systems are difficult to scale. When your business grows, so does your requirement of keeping abreast with more regulations, new geographies, and a larger product set. But the more you expand, the more complicated compliance becomes to handle without adding resources.

• The Hidden Cost:
  With no organized system for it, the bigger your company grows, the more compliance work you have to deal with manually. This adds stress to your compliance teams and subsequently makes it more difficult to keep up with new risks emerging, such as new data protection regulations or cyber attacks.
• The Impact:
  Without a scalable compliance solution, your risk of non-compliance is higher as your business grows. While your competitors implement more automated systems to get ahead of developing regulations, you may be lagging behind.

How Automation Can Address These Hidden Costs

While the hidden costs of manual GL20 compliance are significant, they are not unavoidable. By adopting compliance automation tools, insurers can streamline their workflows, reduce human error, and scale their compliance efforts with ease. Here are several ways automation can eliminate these hidden costs:

1. Centralized Compliance Management

Automated compliance platforms, like ComplyNexus, bring all your GL20 controls, policies, and audits together in one place. No more juggling spreadsheets or scattered documents. Everything is stored in a unified system that’s easy to manage.

Benefits:

• No more chasing down scattered data.
• Real-time visibility and consistency.
• Your team can focus on more strategic tasks instead of managing paperwork.

2. Real-Time Monitoring and Alerts

Automation tools can continuously monitor your systems for compliance gaps, sending alerts when something needs your attention. This means your team doesn’t need to constantly check and double-check everything manually.

Benefits:

• Proactive risk management.
• Faster response times to emerging issues.
• Reduced risk of missing critical compliance breaches.

3. Efficient and Seamless Audit Preparation

With automation, all your compliance evidence is stored automatically and updated in real-time. Preparing for audits becomes a simple task of generating reports – no more scrambling to gather data.

Benefits:

• Significantly less time spent on audit prep.
• Reliable, easy-to-generate reports.
• Stress-free, on-time audits.

4. Scalable Compliance Frameworks

Your automation tools can scale smoothly as your company expands, adapting to the additional workload. Integrate new markets, vendors, and products with ease without straining your workforce or making it difficult to remain compliant.

Benefits:

• Effortlessly scale your compliance efforts.
• Keep up with evolving regulations without adding extra staff.
• Stay competitive by adapting quickly to regulatory changes.

5. Lower Risk of Human Error

By minimizing manual cross-checking and data entry, automation reduces error risks. Systems make everything consistent, up-to-date, and correct, minimizing the chance for failed audits or penalties.

Benefits:

• Higher accuracy.
• Fewer mistakes.
• A more reliable and resilient compliance process.

Although adhering to manual compliance procedures may seem like a fix, the embedded costs can stack up. Inefficiencies and mistakes, through to audit fails and scalability problems, manual procedures tend to end up costing more in the long term.

Transitioning to automation tools like ComplyNexus isn’t about being time-conscious – it’s about guaranteeing that your compliance processes are streamlined, scalable, and flexible enough to cope with evolving regulations. Through adopting automation, you can shed these unbilled costs, minimize human mistakes, and concentrate on growing your company and being in front of the competition.