Low interest rates, increased competition, sales channel pressures, legacy technology and proliferating regulations are all putting insurers under pressure to reduce costs and increase operating efficiencies. In this blog series, I’ll examine how these challenges are creating an increasing need for insurers to access specialized finance skills and talent on a scalable, near-real-time basis.
I shall also look how the expansion of shared services for their organizations is enabling insurance industry chief financial officers (CFOs) to address their challenges. Here’s a brief look at some of the challenges insurers face:
The increase in regulation at local, national and global levels has enhanced the strategic importance and value of insurers’ finance and risk functions. These functions now must work together to improve capital planning, risk management and regulatory compliance across the enterprise and to ensure effective reporting and stakeholder relationship management.
Greater cost pressures
With insurers facing greater cost pressures as a result of increased regulation, constrained profits and low investment yields, CFOs are being asked to do more with less. Like their counterparts in other parts of the business, CFOs are under pressure to rationalize the finance cost structure to contribute to overall margin improvement.
International growth opportunities
Many insurers are seeking growth through organic and acquisitive expansion into new markets, while developing innovative products and services aligned with the needs of these higher-growth markets. Geographic expansion and product line innovation, however, call for an agile, nimble and scalable administrative support model.
New talent strategies
Many insurers are struggling to identify, recruit and retain the finance skills and develop the talent strategies needed to support planned initiatives. Insurers, for example, often have a mature finance workforce, with significant tenure within the organization, and struggle to attract top millennial talent.
The valuable experience of their older workers is often accompanied by the negative implication of a higher cost to serve, pyramid imbalances, and potential stagnation of skills and perspectives.
Shared services as one answer
As the above points show, insurance CFOs must address major issues related to resource allocation, supporting enhanced productivity and future growth while controlling costs.
Without improvement to their processes as well as to technology and resource deployment, they will need to add resources at unprecedented rates, leading to higher costs and unsustainable demands on limited pools of talent.
In Accenture’s view, shared services offer one potential answer to these challenges. Though the shared services model has historically been used to support routine, repeatable processes, many insurance company CFOs are seeking to leverage shared services further to create enterprise value, manage risk, improve controls and address regulatory concerns. I’ll explore further in my next post.
Read the report: Enabling Agile Insurance Finance and Risk through Shared Services.