Unlocking the potential of finance for insurers
Finance has an important role to play as many insurers seek to achieve profitable growth, make strategic acquisitions, achieve operating efficiencies, and improve capital management. Insurers that engage in Finance Transformation have the potential to capture significant benefits in these areas.
The evolving role of finance at insurance companies
The role of the Finance function has become increasingly important as insurance companies seek to respond to uncertain and volatile business conditions, as well as comply with new regulatory requirements. In addition to its traditional responsibility of “preserving value” through reporting, controls, and risk management, Finance is increasingly expected to “create value” by developing and executing business strategy in such areas as profitability analytics, mergers and acquisitions, capital management, and integrated performance management.
Many insurance companies will need to change their Finance organizations to meet the demands of today’s marketplace. Achieving the potential of Finance to add value often requires companies to take a holistic view—considering which capabilities should be targeted for improvement based on the importance of the various roles that Finance plays in the organization. Transformation projects should have bold goals but should also establish a limited number of high-impact objectives. And Finance, IT, and the businesses should be committed to the effort and work cooperatively, typically supported by full-time resources.
While these principles may increase the likelihood of success, in many ways, the first step is the most important one: Beginning with a clear strategic vision of the different ways that Finance can help the company achieve its business objectives.