In last week’s blog post, The glass is half full: Seeing insurance regulations as opportunities, I touched on how integrated planning can help insurers make better strategic decisions. Now, let’s delve deeper into how an integrated plan works.
Five key elements of an integrated plan
In Accenture’s experience, insurers may want to consider an approach based on the following five distinct and related key elements of an integrated plan:
- Strategy – Insurers should set out the medium- to long-term value proposition to provide strategic direction and align internal activity.
- Planning – Introduce greater detail and specificity over the medium term by defining strategic initiatives and the investment allocated to each activity.
- Capital management – Define the economic and solvency capital requirements, summarize the balance sheet and outline the reinsurance arrangements for achieving the strategy.
- Risk assessment – Actively challenge the baseline integrated plan and use clearly defined scenario and stress events to understand how robust the plan is.
- Reporting – Reconcilable views under different reporting bases are an important part of an integrated plan and can help engage stakeholders.
Fitting the pieces together
The challenge many insurers will face is realigning the key elements to produce a consistent and common output that contributes to an integrated plan. There are many components that are dependent on each other and required for an integrated plan, as illustrated in the chart below:
Establishing alignment can be a challenge, even for insurers with mature capabilities. An integrated plan should be central to how the business in managed, while verifying whether the content of the plan is defined in a consistent manner. Next week, I’ll take a closer look at how technology will play a key role in an integrated plan and how it can be used to assess the risk and reward trade-off.
To learn more in the meantime, download Integrating Risk and Capital Management into Strategy and Planning (PDF; opens in a new window).
Read other posts in this series: