The insurance industry is under incredible pressure. In addition to ongoing challenges from the COVID-19 crisis, insurers face pressures when it comes to new regulations, increased M&A activities, talent recruitment and retention, and cost reduction—all redefining the way business gets done today. For many organisations, these challenges are compounded by IT complexity—including ageing solutions that pass data through a maze of convoluted repositories, making processing overly complex and reporting difficult at best. Four Deloitte leaders discuss the silver lining of complex compliance reporting, playing the long game in a finance transformation, the role of upstream consistency for downstream efficiency and the role people play in building a next generation platform.
Data sits at the core of compliance and regulatory compliance is requiring increasingly complex reporting. That, says Mike Hamby, managing director, Deloitte Consulting LLP, can pose a real challenge for organisations and meeting the requirements can create strange bedfellows. “It’s requiring financial data and actuarial data to be pulled together into the same view. Being able to optimise that type of data and optimise those type of reporting requirements is really a challenge for organisations.”
That said, the upside of regulatory pressure can mean paving the way for transformation might mean building a strong case for compliance as part of the initiative. Doing so can mean budget and resource support, along with an organisation-wide commitment to see it through. That has a knock-on effect of creating a wealth of rich data and robust reporting the entire organisation can use. Says Hamby, “it really does provide an opportunity to take all of these pressures that are coming at the organisation and use them effectively and actually optimise the business.”
Insurers’ finance organisations are frequently too focussed on the logistics of acquiring and processing business transactions leaving little time to actually do the high value task of analysis. “It’s really about getting your arms around the detail,” says Seth Hedlund, managing director, Deloitte Consulting LLP. “Analysing a transformation for an insurer they need to be able to have this focal point that brings together all of these different disparate systems, these policy administration systems, claim systems, reinsurance systems, commissions, all these other systems that are generating, business transactions.”
Rob Ried, principal, Deloitte Consulting, LLP, offers the challenge to resist the urge to purchase the “bright and shiny” as the transformation and instead, to look under the bonnet and focus on the hard things. “We need to make sure that all of this data becomes accounting-relevant, tax-relevant, treasury-relevant, all within a single stop shop.”
With between two and ten trillion global transactions daily, insurers are swimming in disparate data sources and products. “All of that data coming in,” says Ried, “has to be made immediately relevant. And the more relevant we can make it the further upstream, the more insurers can automate the inputs being done by legions of actuaries, accountants and data analysts.”
Consistency upstream means an automated downstream, and that, in turn, can drive efficiency into an organisation. Says Seth, “If you're getting data in the door correctly and making sure that it's standardised and at the level of granularity that you need you basically are setting it and forgetting it. Then you're letting it sit on those tracks and start to roll through the process, have the transformation that's needed to be done to generate the accounting and then it rolls seamlessly right into the general ledger.”
Financial services, and specifically insurance programmes, require a specific set of skills. The planning, staffing and execution require a unique focus, which makes the people engaged in a transformation all the more vital to the project’s success. Says Michael Byrne, senior manager, Deloitte Consulting LLP, “You don’t want to underestimate the effort needed to unpack those elements. It’s the knowledge of the industry, but also of the business and it's the collaboration of those two things that result in a next generation platform.”
Extending the idea of how critical people are transformation, Hamby offers companies could consider transformations as a way to attract and retain talent. “Your top talent can not only transform your business, but ultimately take the business to the next level.”
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