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WHY BETTER PLANNING COULD BE THE INSURANCE INSURERS NEED

Adam Bimson, Chief Customer Officer, Vuealta

 

Insurance is predicated on the ability to plan effectively, to model accurately, and to predict the likelihood and impact of certain events. Whilst already facing significant regulatory, competitive, and customer disruption, the industry, like all others, has now been deeply disrupted by the pandemic. From an operational perspective, insurers have seen their workforces dispersed, their technologies stretched to the limit, and customers put under immense pressure – and in turn, that strain has been put on the insurers themselves.

Then there’s the increase in customers focusing on wanting to better protect themselves. Separate reports have found that the number of people making wills has risen at the same time as life insurance has seen a spike in interest. And for commercial lines, corporate customers are carefully scrutinising their current and future business disruption insurance, again with an eye on increasing their cover.

When is a growth in customers a problem? When you can’t handle each one properly. No business wants to fail due to too much success, but if insurers do not adapt rapidly, that is the risk they entertain. Whilst there may be an uptick in demand in some areas, the market is still awash with competition and tight margins.

Adam Bimson

Added to this are the demands of IFRS17, due to come into force in January 2023. That may seem a long way off, but the reporting requirements it places on insurers will require significant organisational, data and technological change, all of which needs to be started now.

 

Two challenges to overcome to achieve better insurance

This all points to the need for a fundamental shift in the way insurers operate in not one, but two areas.

Firstly, there is the need to adapt their operational model so that the effects of disruption, whether driven by the pandemic or regulation, do not impact the experience their customers receive.

Secondly, they need to reinvent their business so that the services and products they provide are both appropriate for customers and capable of withstanding future upheaval.

In both instances, technology, or rather the ability to consolidate, analyse and action data-driven insights through the use of technology, may offer the solution.

Why? Because as with so many things, the issues that insurers face are built on data. Being able to harness it gives them a much better chance of tackling those issues head-on. For instance, when it comes to operational models, better visibility (powered by data), combined with accurate scenario-based modelling and planning, will aid the development of a more agile organisation. Whether it’s adapting to a reduction in staff headcount as infections spike in different parts of the country or anticipating when customer service functions may be impacted by local lockdowns and increased restrictions. Being able to identify problems and react accordingly will be critical to delivering operational continuity and, therefore, unimpeded customer experience, and data lies at the heart of this.

Then there’s how it can be applied to evolving products and services for customers. Customers, whether consumers or businesses, are going to want to feel covered by their insurance – insurers will want to balance this with the need to not overexpose themselves to events that could appear out of nowhere. Here’s where the combination of accurate data use and the right digital tools, such as artificial intelligence-driven solutions, can help insurers take a major leap forward. Premiums can be adjusted, and more dynamic products tailored to the needs of customers can be developed.

Being able to use data more effectively is going to play a major role in complying with IRFS17, both in getting ready for its implementation and meeting its requirements in the years to come. Complying with a reporting standard will drive an investment in data and technology, but harnessed correctly, that investment can unlock wider benefits – the same commitment can be used to cover off all the challenges already covered.

In short, those that use technology effectively, and plan for scenarios appropriately, are more likely to build the types of products and services that fulfil both those objectives, and ultimately keep customers coming back.

 

Planning for the unpredictable

Much like other sectors, insurers need to revamp their business models. Technology, and the better use of data, offers a solution to both operational and customer experience challenges.

Planning for the unpredictable may seem impossible, but by using a variety of data sources, and more importantly, by being able to connect them all and read them effectively, insurers can ensure they continue to meet customer expectations while preparing their businesses for whatever comes next.

 

Business

THE ROLE OF THE CFO IN ILLUSTRATING THE SUCCESS OF DIGITAL TRANSFORMATION

Tim Scammell, Finance, Treasury and Risk Solutions at SAP

 

It’s no secret that there are changes occurring within the modern corporation. While roles were evolving as a result of the move to digitisation and automation prior to Covid-19, the pandemic has further accelerated this movement as executives face new challenges. The most obvious is of course, the volatile economy we’re facing which has been the primary focus of the CFO within businesses. According to a recent survey, three-quarters of CFOs expect the pandemic to have either a ‘significant’ or ‘severe’ negative effect on their business in the next 12 months. But the same Deloitte report highlights that for CFOs, business transformation is a top priority, with a strong focus on digitisation and automation.

As such, we’re seeing the role of the CFO change most drastically. While the traditional demands of product evolution and revenue generation remain unchanged, they are also now playing a pivotal role in the wide-ranging ramifications of digitisation in terms of evaluating new dimensions like customer experience, channel management, IoT, blockchain and the associated compliance and legal exposures that lurk within the digital economy. CFOs are therefore vital in pushing digital transformation forward for several reasons and business executives would be wise to harness their skills in the journey.

 

Translating compliance and regulatory concerns

The digital journey is undoubtedly an exciting one, and for many industries, it’s a much-needed overhaul to ensure relevancy and success. However, it’s easy to get caught up in the excitement of implementing new programmes, products and services without thinking about the more mundane aspects. Primarily, the associated necessities that come with any new business operation, like regulation and compliance for example. However, the CFO is uniquely poised to tackle this dichotomy due to their ability to drive digital transformation forward but also deal with the more ‘analogue’ world aspects. The CFO is still dealing with the demands of regulatory reporting, tax, and compliance, which demand significant manual intervention and judgment.

As such, the CFO has the ability to break down the tension between the digital and analogue. The broader C-Suite is often focused on shaping the future and is grappling with the changing landscape of a hyper-competitive digital economy whilst pursuing the resulting revenue opportunities. Aspects like compliance normally don’t fit into this fast-paced thinking. As such, businesses should be harnessing the ability of the CFO to translate the actions of the C-Suite implementing digital transformation initiatives into a different language, one that satisfies stakeholders and legislative requirements. This translation demands the talents of an excellent communicator who understands the digital journey the company is undertaking and can articulate the consequences of these decisions using the analogue languages of compliance and regulatory reporting.

 

Pulling on past experiences

Not only can this best of breed, digital-savvy CFO make this translation due to their understanding of the digital and analogue worlds of compliance, but their extensive experience in building governance models should be maximised by the business too. CFOs are well versed in feeding the necessary information to decision-makers, particularly when it comes to unpredictability. The successful transition to a digital company is accelerated by observing how operational risk reacts to the unpredictable nature of the digital market. As such, organisations should bring the CFO into the digital transformation journey early in the planning stages as they are able to use their experiences to best plan for potential operational risks. What’s more, they can then  plan for the resulting avalanche of data that these digital business models generate and navigate a way of ingesting and processing this information.

 

Highlighting success

But this dynamic can only be achieved when the CFO is able to integrate data from across the organisation to produce the numbers they require for decision making. Such a platform will only exist when businesses make a dedicated effort to bring the CFO into digital transformation plans early so that they can explicitly coordinate actions and create a harmonised view of all aspects of performance, in the digital market.

Through this harmonisation of information, contemporary CFOs are critical to the great digital transformation as the insights obtained from big data and associated technological challenges are all manifested in the numerical results collected by the finance team. Financial results that track the impact the digital revolution has on the company’s competitive landscape and revenue projections. Financial results that enable a confident executive team to drive decisions that result in positive outcomes.

Clearly, the digital-savvy CFO is under a tremendous load. They occupy a wholly unglamorous position in the executive team and one where the consequences of failure could quickly derail the digital transformation of the company. Yet, if the CFO is given the means to draw together the right information, from a large number of sources, they can aggregate this quickly, and with the correct analysis, will be able to covert this governance to a strong position in the digital economy.

 

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Business

WANT TO KEEP YOUR CLIENTS INTERESTED IN YOUR INVESTMENT REPORTS? CHANGE THE NARRATIVE.

Abbey Shasore, CEO, Factbook

 

Why does it matter if your factsheets are issued like clockwork every month, if there is little thought being given to the narrative? Are there not more important elements for asset managers to consider when reporting on investments, asks Abbey Shasore, CEO, Factbook.

The need to achieve or exceed service level agreements (SLAs) is obviously very important to asset management firms. Meeting client expectations is a fundamental part of any business and asset managers take the promises they have made to their investors very seriously. That said, I do sometimes wonder if, in the area of investment reporting, there could be more creativity in SLAs than simply formats, dates and volumes – especially when one considers that it is such a critical delivery of information.

 

Historic vs future

For example, how much of your reporting is historic and how much of it is helping the investor to understand what you (the asset manager) are going to do next month, as a consequence of this retrospective data? In other words, could you follow a structure of: ‘this is what has happened, this is what we have learned, and this is how we are going to change things going forward’.

Take quarterly reports. Rather than simply reporting on the stats for that period in the same way as a monthly report, could a different approach be taken? Perhaps, for two months in the quarter, reports could provide the usual, standard investment update, but every quarter, the investment manager could alter its approach and tell the investor something different.

I have never known an asset management firm attempt this, simple though it is conceptually. The March report could cover lessons learned over the three months and explain how the asset manager will amend its strategy, looking forward to the coming quarter. This might involve introducing more information from the Research department of the fund manager.

 

Changing the narrative

This kind of variation would achieve two outcomes. First, it does more to engage the interest of the investor and second, it would begin to address the question of what is of interest to the client – by changing the narrative.

If investors are reading exactly the same format of report every single month of the year, year in year out, will they ultimately reach the point where they look at the document and think: ‘Well, this looks just the same as the last one so I’m only going to skim it this month’ – and the 25 pages that were so carefully constructed by the Client Reporting team are effectively almost wasted.

In the context of fund factsheets, this variation is less important because a factsheet is a sales support tool for the intermediary or broker and therefore has less impact in that environment. In a client reporting context, however, whether you are reporting to an institution or a wealth manager, it is far more pertinent to introduce a change of approach.

 

Customisation as standard

Asset managers are often asked to explain why they can’t or why they shouldn’t issue custom reports – and often the reason lies in the amount of money the institution has entrusted to the asset management firm. An institution investing only £10 million will generally not have the same options available for the customisation of reports as the institution investing £10 billion. My response to this is that the asset manager has no excuse for denying the smaller investor a heavily customised report.

If an asset manager is working with a reputable vendor that offers a modern, automated reporting system, there is no reason why the smaller client should not be given the same degree of focused content or variability. Yes, there is a limited period of ‘pain’ in setting up the process, but once it is established, with the kind of flexibility that reporting systems have today, deep customisation can become the standard. For example, in one quarter the emphasis requested by the investor may be on Emerging Markets, while in the next quarter it may be on ESG. With a feature-rich solution, that should not be a challenge.

Technology should never be the inhibitor – it should always be an enabler. Your ability to engage with your investor is the bigger inhibitor – so change the narrative.

 

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