Insurance

Zobrazit stránku: Česky

Insurance


The insurance industry must search for reserves in the efficiency of its operation in the coming years since unfavourable economic environment, strong competitive pressures, and requirements of regulators and the government on the financial sector exist. Growth of a market where consumer confidence reaches a long-term minimum is only possible with the use of new opportunities and technologies. Meeting the growth objectives is considerably hindered by adverse economic prospects, although the ability of the Czech households to build up financial reserves has long been superior. Czech insurers are exposed to increasing pressure on profitability and efficiency, as well as new regulatory requirements which include Solvency II. The entry into the new Civil Code or the introduction of a second phase of IFRS 4 (insurance contracts) will generate a significant impact on the insurance business. Insurance is also influenced by demographic changes, the increasing power of emerging markets and changing consumer behaviour.

Our more than 20 professionals in the Czech Republic and our more than 100 professionals in the Central and Eastern Europe will be happy to assist you in solving current problems in the insurance industry. They know the problems of our clients and have years of experience in the insurance sector.


Trends affecting the insurance market

Despite the specifics of the Czech market, we expect a significant impact of global trends in the future. Among the most important, we identify:


Affected area Trend
Business Environment
  • Strong competitive pressure on premium rates to decrease and decline margins of the insurers
  • Unusual sales practices in a number of cases affecting the insurance sector and its reputation adversely
  • Deeper segmentation of the insurance products and the use of modern methods for the pricing of existing products
Effect of regulator
  • The method of sale may be affected by legislative changes and the amount of commission paid to intermediaries
  • Concerning the legal structure, increasing regulatory demands can contribute to the trend of centralization and expansion of the network of branches of foreign insurance companies across the European market
  • Tax and capital optimization
  • Way of managing insurance and risk management - application of the principles of Solvency II results in changes in the management of insurance companies
  • Reporting
  • Compliance
Legislative changes
  • The New Civil Code - expected changes in the valuation of particular liability risks with an impact on the pricing and the amount of related technical reserves, as well as a number of impacts of operational and legal nature
  • Often discussed the taxation of insurance sector and its impact on the functioning of insurance companies
Political influence
  • Investment Strategy - influence on decisions concerning the type of investments and structuring
  • Way of managing insurance and risk management
Demographic changes
  • The product range which reflects the aging population and the changing structure of families
Consumer behaviour and social change
  • Methods of sale - expected urbanization will lead to changes in the way of approaching customers
  • Increasing pressure on the simplicity and transparency of products
  • Used systems and technology
Technological changes
  • Methods of sale - growing importance of purchasing services through Smartphones and tablet devices will require changes in technology also for the insurance companies
  • Systems and technology - we assume that the growing phenomenon of cloud computing will concern the insurance industry too

How we can help:


Regulation

Audit

insurance companies, branches of foreign insurance companies, reinsurance companies and branches of foreign reinsurance companies operating in the Czech Republic are subject to the statutory audit of the financial statements. Our company uses its years of experience in the insurance industry and takes into account the specifics of the client while maintaining an objective and independent approach while performing the audit. We communicate any findings and further steps with our clients during the audit.

Services:

 
  • Audit or review of financial statements prepared in accordance with International Accounting Standards, audit or review of financial statements prepared in accordance with Czech Accounting Act
  • Audit or review of group statements, review of interim statements or review of internal control process
  • Audit or review of financial statements prepared in accordance with U.S. GAAP, audit of financial statements prepared according to other national standards
  • Advice on solving specific accounting issues and the implementation of new accounting standards and regulations
  • Other assurance services

Contact:

  • Martin Hrdý
    Manager, Assurance services
    Tel: +420 251 152 226


Solvency II

is a planned reform of insurance standards within the European Unionwhich will require the introduction of a new approach to risk and capital management and introduce increased reporting and modelling systems requirements. The new legislation is to be effective in 2014. The main challenge concerning the implementation of this new regulation is the combination of additional regulatory requirements with the daily insurance business. Investing in the implementation of this new regulation should be reflected in the improvement of the management and decision-making. More sophisticated risk-based capital management aims to not only meet the requirements of the new regulation but also provide a better picture of the relationship of risk and income in order to better allocate capital and ensure sustainable growth. Last but not least, the implementation of a new reporting system for Solvency II brings opportunities and challenges for improving existing processes and systems.

Services:

 
  • Advice on creating implementation strategies of Solvency II
  • Support for the implementation and testing of models for the calculation of reserve requirements (Pillar 1)
  • Preparation of documentation and internal guidelines for a risk management system across the organization (Pillar 2)
  • Calculation / estimation of the new capital requirements, allowing early mobilization of necessary resources
  • Analysis of the availability of financial and non-financial data for reporting purposes
  • Project management of the Solvency II implementation
  • Support the selection of suppliers of information systems who are necessary to meet the requirements of Solvency II

Contacts:

  • Jozef Dúcky
    Manager, Actuarial Services
    Tel: +420 251 152 224
  • Martin Hrdý
    Manager, Assurance services
    Tel: +420 251 152 226


IFRS 4 and IFRS 7

their implementation will bring the long-awaited standardization of reporting in the insurance sector. In addition to the impact on the reporting, it will also affect the form of insurance products or the way the results are evaluated by analysts and investors.

The new form of presentation of the accounts associated with the new valuation model of insurance contracts and related assets and liabilities will not only lead to a reassessment of incentive programs for the insurance companies’ management but is likely to have an impact on the development of new products, the structure of the distribution network and the IT environment.

Since the introduction of the new standards, IFRS and Solvency II cannot be considered separately. There are discussions on the possible use of synergies taking place at the European Union level. These could be found mainly in the areas of data management and modelling and their goal is to avoid the costs associated with dual building, or dual treatment systems.

Services:

 
  • Advice on the implementation of the new IFRS standards
  • Support in the creation and setting of calculation models of technical provisions
  • Support in the preparation of modified structures of governance in relation to the new requirements on standards
  • Staff training
  • Project management for implementation
  • Support in the design of financial statements in accordance with the new IFRS standards

Contacts:

  • Petr Kříž
    Partner, Assurance Services
    Tel: +420 251 152 045
  • Jozef Dúcky
    Manager, Actuarial Services
    Tel: +420 251 152 224
  • Martin Hrdý
    Manager, Assurance services
    Tel: +420 251 152 226


FATCA

FATCA (Foreign Account Tax Compliance Act) - the new tax law which was adopted in the USA in 2010. The purpose of this law is to prevent U.S. citizens from avoiding taxation through transfer of funds to foreign financial institutions and investing in foreign assets. FATCA places additional requirements on foreign financial institutions (inter alia life insurance companies) in terms of the process for identifying U.S. persons having financial accounts held outside the U.S. or having non-U.S. assets. It introduces the related specific control procedures and other duties.

The successful implementation of all requirements of the Act relies on the reconciliation of all the key areas, namely procedural practices in the area of on-boarding new clients, AML, risk management, IT and on the analysis of the legal and tax implications of the measures.

Services:

 
  • Provide advice on the implementation of FATCA
  • Preparation of analysis of the current state, the implementation process and impact analysis and training on FATCA
  • Reduction of administrative burdens of the FATCA implementation for our clients by preparing solutions tailored to specific company
  • Information service on the latest developments in intergovernmental agreements on the implementation of FATCA

Contact:

Increase in operational efficiency and customer service

Many companies have tried to streamline processes in response to the resulting financial and economic crisis but often did not reach the expected savings or were not able to anchor the change within the company.

Increasing the efficiency of operation support processes in insurance companies is perceived as an important means of maintaining profitability despite difficult market conditions. In addition to maintaining profitability, it is essential to respond to demands for greater transparency, faster access to information and effective communication with the client. The increasing use of the Internet and various applications leads to increasing demands of clients the insurance companies. Clients increasingly use electronic communication with the insurance company to avoid needing personal visits. We expect that this trend will continue in the future and timely responses to the increasing demands of clients will be inevitable to maintain market competitiveness.

Companies looking at the crisis as an opportunity to re-establish processes, with the aim to achieve sustainable growth and efficiency, are currently considering the use of synergies from the centralization of activities, simplifying products and eliminating unnecessary activities. Simplification can contribute not only to cost saving but it can also strengthen management controls and improve overall functioning by setting realistic and feasible goals for the future.

Services:

 
  • Review and streamline of processes in the area of operation (back office, liquidation, call centres, collections and IT)
  • Establishment of shared service centres, outsourcing and centralizing processes
  • Cost optimization
  • Reward systems design
  • Introduction of lean principles in process management

Contacts:

Information Technology

An effort to centralize and optimize systems and operations along with the simplification of data warehousing, establishment of centres of excellence or off-shoring is the trend in information technology of the insurance companies today. At the same time, however, there still remains the pressure of cost reduction which also applies for the information technology environment. In the field of information technology, we focus mainly on innovation, sales improvement through proper use of IT and the overall efficiency of operation.


Services:

  • Use of electronic information channels
  • Introduction of electronic communication with the insurance company and its improvement
  • Customer care and marketing
  • Customer data management solutions design, including their security
  • Business intelligence and system management
  • Possibilities of using social networks

Contacts:

  • Michal Kohút
    Senior Manager, IT & Transformation
    Tel: +420 251 152 078

Finance

Creating added value and identifying opportunities to improve the financial performance of a company is one of the main goals of the finance department today. The shift from traditional support functions in the role of business partner allows the finance department to minimize the time spent processing standard transactional information and reporting and also pursue activities with higher value added, such as support for management decision-making processes, security, business rules and financial discipline. Despite the important role of the financial sector in the company, the financial director faces increasing pressure on higher efficiency of the functioning of the body while maintaining the requirements for efficient and flexible financial management.

Savings in the departments of finance arise mostly from the elimination of redundant activities, consolidation of activities (e.g. through the creation of shared service centres) and the standardization and automation of processes. The organization's financial directors oversee the effectiveness of planning, forecasting and investment management. In these areas, we can help you achieve more than 20% cost savings.


Services:

  • Introduction of cost allocation procedures based on Activity Based Costing
  • Liquidity Management
  • Evaluation of the reporting processes, together with improvement propositions and their implementation
  • The implementation fast and efficient reporting process "Smart Close"
  • Streamlining of financial processes while maintaining the necessary controls and with no limitations to the company’s operations
  • Advice on efficiency assessment of a shared services centre (SSC) and outsourcing of activities
  • Advice on solving specific accounting issues and the implementation of new accounting standards and regulations
  • Advice on revision of processes and tools for planning and forecasting

Contacts:

  • Martin Hrdý
    Manager, Assurance services
    Tel: +420 251 152 226

Actuarial Services

Actuarial insurance services are gaining importance. Insurers are facing problems with the effective use of staff with specific technical expertise. The role of actuaries is gradually shifting from supportive towards business (product segmentation, competitive pricing, sophisticated analysis of new business, etc.). Experienced actuaries are scarce and their effective utilization is critical to the success of insurance. In the near future we can expect that the requirements for actuary resources will grow, whether in relation to market pressures or in response to new regulatory and legislative environment (Solvency II, IFRS 4 - Phase II).

Our products:

  • Services of the responsible actuary in accordance with the requirements of the Insurance Act
  • Assessment of the structure and use of actuarial departments in an insurance company, optimizing the use of actuary knowledge to business needs
  • Revision of actuarial methods used by companies and recommendations for further development
  • Assessment of the existing segmentation of insurance products
  • Assistance on the creation of new insurance products
  • Review and suggest improvements to the distribution strategy when faced with the growing power of pre-sales channels and internet sales
  • Advice on the use of the GLM model (generalised linear modelling)

Contacts:

  • Jozef Dúcky
    Manager, Actuarial Services
    Tel: +420 251 152 224
  • Martin Hrdý
    Manager, Assurance services
    Tel: +420 251 152 226

Innovation in product development and in the manner of sale

Demographic, social and technological changes lead to a growing need for innovation, product development and sales channels employment. An important success factor is the identification of an innovative potential of the insurer which would make a significant step towards a culture of innovation. In the current market conditions, the introduction of major innovation is a significant aspect in the company's growth. Innovation is also a means of retaining talented employees. The wrong approach to innovation can result in high cost and prolonged time to introduce innovations into the market and the associated risk of commercial failure.


Services:

  • The analysis focused on the potential of innovative product development and its contribution to the company’s revenues
  • Benchmarking distribution channels with best practices
  • Identification of deviations of the current structures from the leading innovative practices to create a culture enabling spontaneous emergence of innovation
  • Identification of the most creative employees and their innovative skills
  • Mapping the course of innovation emergence within the insurance company
  • Analysis of the company’s requirements and impacts of innovation on its customers

Contacts:

  • Karel Půbal
    Director, Advisory Services
    Tel: +420 251 152 037

Human Resource Services

Our services in the field of human resources are based on the desire to help the company maximize the potential of its people so that it successfully follows the company's business strategy and also the needs of employees. We believe that the balance of these assumptions leads to a stable growth and it is our priority to offer the Czech market advice on corporate culture change, effective organization, leadership development, and innovation, and make it a crucial period on the path to higher profits and happier customers. Our experts have been involved in the acquisition of knowledge and have experience in the implementation of organizational change and can therefore quickly and efficiently detect risks that prevent companies from achieving desired objectives.


Services:

  • Management of organizational changes, which focus on setting the vision and goals of the organization, defining and directing strategic plans, organizational design and internal communication changes
  • Analysis of utilization of human resources and identification of opportunities for performance improvement
  • Transforming HR and assessment of its value added in relation to the strategic direction of the company;
  • Communications consultancy focused on key employees of the insurer
  • Changing the culture of leading managers, where the process of changing corporate culture is perceived as closely linked to the development of leadership, while the managers become exemplary bearers of values on which the corporate culture is built. Our solution proposes a course of cultural change to bring it in line with the strategy. This result significantly improves customer experience
  • Innovation management as a part of promoting an innovative culture, where our aim is to offer an overview of the potential to innovate and provide a know-how on how to build a stable innovative strategy that supports the creativity of employees, effective use of the potential of social networks and collective technology. It also provides early removal or change of processes and structures that inhibit this process

Contacts:

Change Management

To stay competitive on the market, it is crucial to get the best from people across all levels of the company in the times of continuous change. Strategy, process, and technology alone will not bring the desired results. To achieve those, it is inevitable that people accept, adopt, develop and maintain change in order to achieve tangible results. Success in business depends on the strategic flexibility and ability to act.


Services:

  • Preparation of the organization’s structure so that the capacity and resources are ready to make a change
  • Preparing managers to lead teams in the change process
  • Placing the right people with the right skills in the appropriate roles at the right time
  • Identification of people affected by the change and their involvement in the implementation and sustainability of the changes
  • The introduction of changes in corporate culture as an element of competitive advantage
  • The introduction of control mechanisms and coordination needed to successfully manage projects in order to achieve the objectives
  • Engaging and motivating resources to focus on the right activities and support efforts to achieve high output quality and work efficiency in implementing the change
  • Design of effective strategies for human resource development and their professional growth

Contacts:

Tax Services

Research and Development tax allowance

The Czech Income Taxes Act allows taxpayers to deduct from the corporate income tax base 100% of expenses incurred when realizing R&D projects. The tax savings available to the company in respect of the performed R&D activities result from the fact that the eligible R&D costs may be applied twice – once as tax-deductible costs and then again as a tax allowance.

The basic criterion for differentiating R&D from other (related) activities is the presence of a measurable element of novelty in R&D and clarification of research or technical uncertainties.


Examples of R&D projects in insurance:

  • Research on projection methods; development, usage or maintenance of software
  • Research and development relating to electronic insurance, internet services and application of e-commerce
  • Research of social developments impacting new types of insurance (e.g., health, retirement, insurance for smokers)
  • Research of risk models of credit policy (e.g., Solvency II)

Services:

  • Assistance with identifying projects eligible for the R&D tax allowance
  • Preparation of the legally required documentation in cooperation with the company’s expert
  • Evaluation and maximisation of the R&D tax allowance

Contacts:

Optimization of VAT deduction

Insurance activities are exempt from VAT without the entitlement to input VAT deduction, nevertheless majority of insurance companies provide also activities that give them a right to deduct input VAT. From our practical experience it is possible to achieve VAT saving by applying correct direct allocation of the costs to the provision of services giving a right to deduct input VAT. Alternatively, it is possible to set up an internal system so that the coefficient for claiming input VAT deduction is fully maximized.

Services:

 
  • Assistance with identification of the costs for direct allocation to the supply giving a right to deduct input VAT
  • Revision of the calculation of coefficient for claiming input VAT

Contacts:

Other areas in which we can help include: