As reported in our High Performance Finance Study, Insurance Report, finance executives at insurance companies aspire to a single, enterprise-wide approach to managing finance and risk.
Many providers have not yet centralized their finance and risk resources—instead scattering them into multiple operating segments, each with their own risk and finance teams. Each team, thus, is focused on different concerns and answers to different leaders, depending on the operating segment’s priorities and needs. When regulatory demands change, orchestrating revisions across multiple segments can be an exercise in frustration.
Unfortunately for the insurance industry, this model is the rule rather than the exception. Only 12 percent of insurance providers report having a single, enterprise-wide finance and risk model. However, nearly 3 in 4 survey respondents indicate they are aiming for a single, enterprise-wide risk and finance repository, which could support an enterprise-wide model, within the next two years.
By centralizing the finance and risk function, insurers will be better able to nimbly respond to regulatory hurdles. They will see much greater efficiency across finance and risk. And, they’ll be positioned to serve customers better, in a timelier fashion.
The two-year timeline seems aggressive, but it is not out of reach. To rapidly centralize finance and risk, the CFO will need to be active in pushing things forward, building a business case and working to align stakeholders up and down the organization. The gains will be well worth the trouble. Centralizing risk and finance across the enterprise can help insurers tighten processes and eliminate redundancies, freeing resources to focus on growth.
In my next post I’ll discuss the technology trends that insurers can’t afford to miss.