Fresh C-suite interest and new technology enable CFOs to drive finance transformation. And now, with the IFRS 17 standard expected May 2017 some are thinking about how they can use this opportunity as a catalyst to transform the finance function.
With significant regulatory, accounting and actuarial changes on the horizon, many forward-looking insurers are thinking about how they might use these changes as the catalyst to transform the insurance finance function to become a better business partner and drive value for their organization.
Increasingly, CEOs and business leaders are looking to the finance function for help improve costs and efficiency, drive customer centricity and growth, and to comply with new regulations. But according to a survey of insurance CEOs conducted by KPMG International, few think that the finance function is ready to take on the task.
To be fair, most finance and actuarial functions are struggling to keep up with current demands from the business, as well as outdated technology, siloed policy administration systems, growing competition for experienced professionals, and recent regulatory changes catalyzed by Solvency II in the EU and developments in other jurisdictions. Few have the appetite for more disruption and our discussions with insurance sector finance leaders suggest that past experiences and current perceptions are dampening enthusiasm for new transformation initiatives.
The good news is that many of the traditional barriers to transformation are rapidly falling away. CFOs are being encouraged by their executive teams to pursue new finance-driven initiatives such as enterprise performance management. CFOs who can create a business case for transformational change that demonstrates alignment to the organization’s growth objectives should executive support and easier budget approvals.
In addition, now that technologies are sold as a service, such as cloud infrastructure, companies can vastly accelerate change and avoid fixed-cost hardware commitments via pay-as-you-go arrangements. Similarly, new software applications for data management and self-service analytics make it easier for the business to mine data for insights.
With the upcoming introduction of new reporting standards around the world, insurance CFOs now have a strong motivation and catalyst for transformation. Insurers are starting to recognize that the implementation of these new standards and regulatory requirements will at the very least require significant change in their current finance and actuarial operations. The broad scale and complexity of these operational and technology impacts are helping insurance executives realize that these changes are actually an opportunity to transform their finance function. To succeed, finance leaders will need to take a hard look at their systems and data architecture, business processes, controls and organizational design, to extract the best possible value from the investments to comply with these changes.
With the stage set for transformation in regulation and external reporting, finance leaders should think seriously about how to take advantage of the current environment to become a better partner to the business. We believe a number of key success factors are critical to designing and delivering successful finance transformation in the insurance sector:
Ultimately we believe that finance leaders and CFOs should be looking at the implementation of these changes as an opportunity to rethink their operating models, refresh their organizational design and create stronger alignment to the business. With the cost, complexity and barriers to transformation rapidly falling away, there is no better time for finance leaders and CFOs to start thinking about finance transformation.
Life insurer tackles outdated actuarial modeling through cloud based technology in preparation of accounting changes
IFRS insurance contracts standard will have far reaching impacts for life and P&C insurers and reinsurers.