In today’s challenging economic environment, chief financial officers (CFOs) in the insurance sector operating say that achieving growth is an imperative. However, one of the biggest parts they must play is in supporting the business by providing clear, insightful and timely analysis for decision-making. Against this backdrop they also must balance new accounting standards that are coming, with the search for efficiency by introducing new finance operating models, according to the annual EY Global Insurance CFO Survey, of finance leaders from nearly 60 global insurers
To address these needs, CFOs have a clear vision on their finance priorities through 2020 and beyond. Seventy-four percent of respondents cite providing better insight (including faster, relevant and integrated financial analysis) ranking a top priority. Aligning finance, risk and actuarial information rises to the second spot with 48%, followed by the 47% saying achieving efficiency through process simplification and automation. At the same time, 41% cite fast and secure reporting as a key requirement for providing timely insight, and 33% say implementing regulatory and financial requirements is a top concern.
Nicola Panarelli, EY Global Insurance Finance Transformation Leader, says:
“With growth high on the agenda for the insurance industry, CFOs across all regions (Europe, Americas and Asia-Pacific) are increasingly investing in infrastructure and technology to promote better decision-making. This is vital if they are to achieve the business and revenue growth they seek. Against this backdrop, new accounting standards and multiple reporting bases are looming for insurers. Now is the time to work on the efficiency of the finance framework and to continue chasing faster reporting timeframes, combining compliance with an efficient operating model.”
Supporting business imperatives
Business partnering is becoming the key driver for closely aligning finance, risk and actuarial functions. 48% of CFOs see this as a fundamental requirement to provide insight to the business across all key metrics, including capital and risk. They are robustly challenging the status quo and change inertia that prevents straight-through processing for finance, risk and actuarial reporting and analysis, and are eliminating manual hand-offs as quickly as possible.
In fact, 51% of respondents complain about siloed data, systems, timetables and processes that are not integrated. Their biggest challenge is the lack of a unique integrated platform that is able to manage multiple methodologies across accounting and planning activities. Such a platform would improve the timing of processes and quality of data input and output.
A new finance operating model
Many global CFOs have clear goals in creating their target finance operating model by 2020. A clear trend shows a continued expansion of the CFO role including ownership of all financial data and analytics. A new target operating model, with standardized and automated processes, will enable a more integrated vision across finance, actuarial and risk.
By 2020, the finance and actuarial operations model will need to be properly aligned with strategic priorities, according to survey respondents. Digital solutions will raise business expectations of what could and should be achieved from the finance function. As CFOs better understand the opportunities that technology can provide, many will pilot projects to build the case for their use.
People will also make a difference. Building analytical skills and communication skills are the top people development priority identified by CFOs, with 46% investing in people to develop their skills.
Panarelli says, “Some insurers are already investing in finance change programs that will encourage new thinking about how financial reporting, planning, analysis and management information will be delivered in the future. New technologies and the drive for efficiency presents opportunities for CFOs to press the ‘reset’ button and focus on change.”