Traditionally seen as less exposed than banking, insurers and reinsurers now face increasing pressure from regulators, evolving fraud tactics, and the urgent need to modernize compliance frameworks.
During our recent webinar, “Regulators, Risk & Reinsurers: AML’s New Frontier”, I had the pleasure of moderating a discussion with two highly respected leaders in financial crime prevention:
Together, we examined the operational, regulatory, and technological challenges shaping anti-financial crime (AFC) in the insurance and reinsurance markets, and explored strategies for building more resilient frameworks for the future.
While money laundering is a recognized concern, our panel highlighted that fraud, sanctions, and bribery/corruption risks often pose even greater challenges for insurers and reinsurers.
“The biggest risk the industry faces is still fraud. One in every 100 insurance claims is fraudulent and that impacts all of us, from higher premiums to slower payouts.” – Dr. Mario Menz
Fraudulent claims, averaging between £10,000–15,000 each, not only harm insurers but also burden policyholders through higher premiums and delayed claims processing. At the same time, sanctions - particularly following the conflict between Russia and Ukraine - have placed insurers under heavy scrutiny, forcing firms to rapidly strengthen monitoring capabilities.
Perhaps most concerning is the recurring theme of weak customer due diligence (CDD). The impact of the UK FCA’s £7.8m fine against JLT Specialty Limited (JLTSL) underscores how poor oversight of introducers, inadequate onboarding checks, and weak commission payment controls can leave insurers exposed to significant penalties and reputational damage.
The complexity of global insurance operations was a recurring theme throughout the session. Insurance groups often operate across multiple jurisdictions, each with unique governance structures and regulatory requirements. This diversity, Martina noted, creates blind spots for compliance teams, particularly in distribution models reliant on brokers and intermediaries.
“Regulators are no longer just asking what controls we have in place. They want to know how effective those controls are. It’s a clear shift toward outcome-based supervision.” – Martina Cont
This shift demands that compliance teams go beyond ‘box ticking’. Broad regulatory requirements must translate into practical, operational risk controls tailored to specific business lines. Achieving this requires collaboration, not only between compliance and business operations, but also across institutions through knowledge sharing and collective best practices.
Outcome-based supervision means insurers/reinsurers must demonstrate that their controls actually work - not just that they exist. Internal quality assurance, ongoing monitoring, and transparent reporting are no longer optional, they are essential.
When asked about the role of technology, both panellists agreed: AI and automation are no longer ‘nice-to-haves’ but are critical tools in modern compliance.
“AI isn’t the future anymore - it’s the present. Insurers are already using it to identify red flags and risk triggers in ways we couldn’t before.” – Dr. Mario Menz
Some standout examples shared during the discussion included:
Martina emphasised, however, that AI is not a silver bullet. Strong governance frameworks, audit logs, explainability, and human oversight remain critical to ensure technology enhances - not undermines - compliance outcomes.
Our conversation also touched on KYC processes. While KYC is often treated as a compliance checkbox, Martina urged insurers to see it as a strategic risk management asset.
“KYC is not just a compliance obligation—it’s a risk management asset. Used properly, it strengthens both compliance and the business.” – Martina Cont
The key challenge? Bridging the gap between written policies and real-world execution. Without the right tools and training, requirements often fail to translate into consistent day-to-day action. The solution lies in:
Looking ahead, our panelists agreed that the AFC risks themselves -- fraud, sanctions, bribery, money laundering -- aren’t going away. But the way insurers respond must evolve.
Mario warned of the growing threats from synthetic identities and deepfakes as digitalisation accelerates, particularly in retail insurance. Martina emphasized the need for flexibility and continuous adaptation:
“We will never be perfectly prepared for every risk—but we can always be prepared to act. Flexibility is the key.” – Martina Cont
Both agreed that insurers must:
The risks defining insurance and reinsurance sectors are ones that they cannot ignore, whether it's fraud, sanctions, or actions related to bribery. Regulators are demanding evidence of effectiveness, not just compliance on paper. And technology, especially AI and automation, offers unprecedented opportunities to strengthen controls, but only if paired with strong governance and collaboration.
Tthe future of AFC in insurance will be shaped not by the risks themselves, but by how effectively we respond - with innovation, technology readiness, agility, and a collaborative mindset.
If you missed the live discussion, you can catch the full webinar on demand now.
Compliance myth-busters: AML insurance—still low risk?
AML compliance designed for insurance
White paper - Elevating compliance in insurance
Data Sheet: Compliance for Insurance
The on-demand webinar is available now.
Charmian Simmons is a Financial Crime and Compliance Expert covering Financial Services at SymphonyAI. She has over 20 years of experience in the financial sector across risk management, financial crime, internal controls and IT advisory. She is a technology evangelist specialising in AI innovations and transformation. Charmian is responsible for providing practitioner expertise, thought leadership and analysing key policy, regulatory and technology drivers transforming the compliance market. Prior to joining Symphony AI, Charmian was a Fincrime Expert with BAE Systems, a Regional Director of Strategy and Performance for the Risk business at Refinitiv, the Head of Audit in North America at Lloyds Banking Group USA and a Vice President at Morgan Stanley covering Institutional Securities and Capital Markets. Charmian is CAMS, CDPSE, CRMA and CISA certified.
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