In my first post in this series, I looked at some of the challenges driving insurers to consider new resourcing models for their finance and risk functions. Now, I’ll look at how properly structured and implemented shared services can create a cost-effective and scalable global support platform for insurance finance and risk functions.
We at Accenture believe that a shared services model can help insurance finance and risk functions in a number of priority areas:
1. Meeting regulatory demands
Often risk and finance should be using the same data and reporting models, but are not; shared services integrating the finance and risk operating model and financial data architecture could deliver this benefit.
Insurers may also require increased granularity of source data to support the requirements of different regulatory bodies. A shared services operating model for finance can enable the needed consolidation and integration of these areas.
Shared services can also provide central governance as the single point of contact for maintaining and managing a common financial data architecture with ongoing standards for data integrity and reporting across the enterprise.
2. Reducing process complexity and cost
Many routine insurance finance and risk processes are clear candidates for consolidation to achieve economies of both scale and skill. Shared services provide the tools to enable cost structure optimization.
Since many insurance companies have legacy systems and disparate or duplicate functions, there is a significant opportunity to consolidate, standardize, and reengineer these activities to take out complexity that has built up over the years.
Technology rationalization can be an enabler to a scalable shared services model, but there are efficiencies to be realized even without major technological innovation. Insurers can realize value from shared services by simply consolidating and rationalizing the steps, roles, responsibilities, and inputs and outputs to financial reporting.
3. Supporting globalization
Insurers undertaking global expansion will benefit from greater coordination and consistency across multiple local businesses. The new global business model calls for a new global finance support infrastructure, and shared services can provide an agile, flexible method of supporting new business while operating on a global scale.
Shared services models create an opportunity to examine location strategy and determine the optimal site and wage structure needed to support both regional and global operations.
Shared services can also help insurers pursuing a non-organic, M&A-based path to growth to drive a global standard operating model, set of processes and enabling technologies. This supports an “adopt and go” merger integration strategy which reduces the time and cost of successful integration.
4. Attracting and retaining top talent
Shared services help the insurance finance function tap into new, global talent pools, bypassing restrictions and hurdles found in local markets. Shared services can also provide insurers with an opportunity to address pyramid or role imbalances by creating the right structure and jobs to lead the function into the future.
In addition, shared services help the finance function evolve from a “jack of all trades” to a more focused, specialized model. Shared services can help expand opportunities and create new leadership and management roles.
Of course, implementing finance and risk shared services isn’t without its challenges. Developing the right approach is a complex undertaking involving people, process discipline, communications, and an understanding of service expectations.
Shared services must have the ability to continuously monitor and improve performance, supported by key cross-functional processes such as formal continuous improvement programs and client relationship management. This broader system – which we call the service management framework – distinguishes high performing shared services organizations from traditional centralization.
Read the report: Enabling Agile Insurance Finance and Risk through Shared Services.