Financial reporting
Drivers of change
- Regulation and reporting
- Information and analysis
- Operational transformation
Typical insurance modernization initiatives
- Target operating model assessments
- Finance function effectiveness reviews
- Accounting conversions
- Solvency modernization
- Model governance and model risk reviews
- Technology, IT and data
- Hedging strategies
- Reinsurance solutions
- Capital management
- People and change
Actuarial
Current state
- Financial and regulatory reporting is time consuming, labor-intensive and error-prone.
- The company addresses new reporting and regulatory requirements by adding on to existing processes (which are often spreadsheet based), rather than integrating them into the overall reporting framework.
- Finance "owns" the numbers.
- Financial processes are characterized by a dependency on multiple manual reconciliations.
- Actuaries and actuarial departments use badly dated technology and/or default to tools that are familiar but not entirely fit for purpose.
- The control environment is characterized by back-ended detection controls.
Future state
- The company manages complex financial and regulatory reporting in an efficient and cost effective manner, and presents information in a clear manner.
- New reporting requirements are integrated into overall finance, actuarial and risk management work flows.
- Actuarial "owns" several key balances.
- There are consistent assumptions for GAAP, PBR, and risk reporting.
- The finance, actuarial, risk management, and operations use consistent data, assumptions, systems and processes to produce metrics.
- Automated feeds and processes reduce time, fewer manual feeds and reduce dependencies on specific personnel; overall, this reduces error and improves process efficiency.
- The control environment is characterized by front-ended preventative controls – increasing confidence in results at Board and C-suite level.
Data
Current state
- The IT environment is characterized by multiple platforms, legacy systems, and calculation engines.
- Actuarial often believes IT does not understand its needs and lacks the flexibility to perform all desired analyses. In turn, IT often believes actuarial lacks discipline and control.
- Data is poorly managed across multiple repositories.
- Multiple sources of the truth – no standardized data directory.
- Significant amount of resource spent generating data and addressing and data needs.
- Expensive to maintain and manage.
Future state
- Actuarial production systems are supported by and integrated with the IT functions platforms, and there is enhanced enterprise architecture for data systems and tools.
- New reporting requirements are integrated into overall finance, actuarial and risk management work flows.
- Data warehouses and integrated systems support improved analyses, and improved automation and enhanced tools facilitate a "single source of the truth".
- Employees are able to focus on value-added analysis that informs stakeholders of pertinent developments in a timely manner.
- A manageable number of modern calculation engines.
- More timely and relevant information is available for strategic and operational planning and decision making.
Investors
Current state
- Investors find it hard to understand the "value drivers" in the business CEOs complain that their companies are undervalued. New reporting requirements will create a new reporting language.
Future state
- Investors understand the business better because they can clearly see the drivers of short- and long-term profitability.
Capital
Current state
- Capital is expensive and used inefficiently.
Future state
- Access to cheaper sources of capital.
- Capital decisions reflect impact on all relevant metrics.
