Insurance—Manage finance, risk and compliance
Major regulatory projects, low interest rates, digital challenges and increased competition
Regulatory requirements for insurance companies have increased significantly in the last ten years. In particular, the EU insurance regulations under Solvency II, which were introduced in 2016, have forced companies to expand their finance departments considerably in order to meet the tightened reporting requirements. Many insurance companies that follow the International Financial Reporting Standards (IFRS) are still busy introducing the new IFRS standards 17 and 9. They are now waiting for the results of a review of Solvency II that the EU has announced for 2020. It is expected that the requirements will be further increased.
The pressure on the finance departments of insurance companies will keep growing due to persisting low interest rates on the capital market. Many asset strategies that they have followed for decades no longer work—for example, the yield on government bonds is now so low that they do not cover the required return in life and health insurances anymore. Finance departments need to harness new return potentials while also reducing costs. Competition and digitalization are also driving change. The fight for customers is getting tougher and product margins are shrinking, so precise management information is becoming more and more important for insurance companies.
Digital technologies are opening up new opportunities for finance and risk departments. But these are facing the main challenge of pragmatically leveraging innovative solutions and new opportunities in a suitable manner. Insurance companies must restructure the internal processes in their finance and risk departments to become more agile and efficient in order to meet future regulatory requirements and reduce costs. Finance and risk executives must also harness new return potentials with new asset strategies while also lowering the operating costs of the departments.
The returns on capital investments can also be increased by means of modern technology such as artificial intelligence. Insurance companies should drive the use of big data (BD) and artificial intelligence (AI) and make both technologies the core of an explicit BD-AI strategy. Doing so would lend coherence and stringency to the digital transformation of all departments and all links in the value chain. At the same time, it would also create a rich source of customer-relevant data whose value can be increased further by means of precise analysis and subsequent use. Insurance companies should also develop a data science strategy to use the potential of data in product calculation, claims management, sales and many other business segments.
Target Operating Model (TOM) for finance departments
We support our clients in developing an agile organization and an efficient process landscape for finance and risk areas. Digital and target group-specific reporting offers high potential for efficiency gains. Effective system and data architectures support the finance TOM long term, facilitate customer-focused digital change and ensure lean operations.
Capital investment management
We help our clients to sustainably increase their capital investment returns. We do so through further developing the management model, in particular to derive strategic asset allocation and asset liability management (ALM). But also through efficiently running the capital investment areas with the help of new alternative sourcing models, investment strategies and technologies.
Digital transformation / BD-AI strategy
We support our clients in defining a forward-looking BDAI strategy and establishing a modern IT architecture including data management. We benefit from our experience gained in numerous IT projects—we understand the interface between IT and specialist departments better than anybody.
Big data and data science
We support our clients in defining tailored use cases through to productive solutions. We help in establishing appropriate systems and data models as well as the foundations of data science models and applications.
Efficient corporate management
Modern corporate management creates transparency about the profitability of individual business units. Commercial law, regulatory and economic perspectives must be seen as a whole to ensure an integrated risk-return management. This requires sound KPIs, an efficient capital management framework and tools for quick scenario analyses.
Regulatory management and reporting
We support our clients in optimizing processes and defining suitable measures for automating reporting requirements, in developing any necessary measures for improving solvency, in the specialist conceptual design and technical implementation of IFRS 17 and in meeting sustainability criteria, a topic that more and more people are watching.