Insurance CFOs prioritise growth, expansion

Around two-thirds of chief financial officers (CFOs) and senior executives at global insurance companies say that achieving growth, expanding into new markets and expanding through M&A are the top three priorities for their business for the foreseeable future, according to Ernst & Young in a recent publication of Global Risk Europe.

At the same time, 54 per cent said managing costs and improving profit was among the top three priorities and 51 per cent said responding to regulatory change was a top concern.

While CFOs are aiming to place greater focus on data management and analytics capabilities to help insurers grow through 2020 and beyond, they must balance this with meeting new regulatory reporting requirements and managing the relative cost of finance, according to Ernst & Young’s 2014 Global Insurance CFO Survey.

All CFOs said investments must be made in the finance and actuarial departments, including improving data management and analytical capabilities and enhancing their teams to advance decision support and performance management capabilities, for them to become better business partners and deliver more value.

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“Challenging market conditions facing global insurers require that managers have access to more relevant and timely performance information. These include insights into product and channel profitability and a robust assessment or challenge of strategic decisions from a finance, risk and capital perspective,” said Ernst & Young.

The Ernst & Young survey found that current reporting processes among global insurers can be inflexible and time-consuming, with too much manual intervention required. On average, 64 per cent of finance and actuarial resources are spent on transactional and reporting processes, compared to an average of only 20 per cent spent on activities related to decision support.

Around 35 per cent of respondents said that meeting new regulatory and reporting requirements is their top priority. In Europe, the Middle East, India and Africa (EMEIA), where insurers are required to achieve faster reporting for Solvency II compliance, that figure was even greater (73 per cent). As a result, insurers want to significantly improve the quality of their data and the efficiency of their underlying processes by 2020.

Sandy Sposato, principal, financial services advisory at Ernst & Young (US), said issues around the quality of data has been and continue to be an area of focus for insurers.

“With new regulatory reporting requirements impacting several organisations, accurate, reliable data is even more important. CFOs recognise this is an issue and are focusing their spending on this area as well as improving the overall infrastructure to support the business for the future,” Sposato said.