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German
English
German
In many cases, insurance companies are still looking for an efficient and flexible operating model - in terms of organization, processes and IT. We support them with our project expertise and develop tailor-made solutions to optimally manage finances, risk and compliance.
Stefan Geipel, Partner
Challenges
Efficient operating model, modernization of data and IT architectures, implementation of sustainability requirements, state-of-the-art management logic
The financial and risk areas of insurers have been significantly expanded in terms of personnel and structure over the last ten years due to the sharp increase in regulation (including Solvency II). Many requirements have been implemented under high time pressure and with a view to pragmatic delivery capability - less so in terms of efficient and resource-saving processes. As a result, the repetitive creation of standardized financial formats is often characterized by manual intervention and high personnel costs for data procurement and quality assurance. Many CFO departments in insurance companies are therefore not working cost-effectively and are coming under increasing pressure to optimize their operating model.
Part of this challenge is outdated system and data architectures that do not ideally support efficient operations from a technical perspective. In many cases, data management in financial areas is highly fragmented, which makes it considerably more difficult to obtain data to generate reporting and notification products and to carry out analyses relevant to management. Outdated and poorly integrated system landscapes with numerous “isolated solutions” and frequent use of MS Excel lead to lengthy processing procedures and high personnel costs.
Another current challenge for finance departments is the sustainability transformation: a sustainable orientation of capital investment, the integration of sustainability risks into risk management and the measurement/management of the CO2 corporate footprint are on the CFO/CRO agenda and must be implemented pragmatically depending on the company-specific level of ambition.
Finally, the finance departments are required to keep their management logic up to date in order to make the impact of strategic business decisions on key financial indicators in the areas of profitability, growth and risk calculable and to further establish themselves as strategic business partners.
Insights
Through the consistent automation of repetitive standard processes, an efficient and agile organizational structure and the use of digital technologies, finance departments can reduce their costs and free up capacity for more value-adding activities. The further centralization of data storage and the use of integrated and modern system solutions support the transition to an efficient and flexible organizational model that also meets future regulatory and internal requirements.
The implementation of sustainability requirements must be considered holistically and with a sense of proportion so as not to overburden the financial organization and to enable a forward-looking orientation.
The further development of the management and risk model is geared towards the growing external and internal requirements and enables tailored support for the divisions and investments with financial information relevant to management. Asset Liability Management plays a central role at the interface between underwriting and investment by making the effects of management decisions on the balance sheet and income statement of insurance companies transparent and identifying levers for increasing investment income. Risk management also provides management impetus on the basis of scenario analyses and stress tests for all relevant risks and current macroeconomic developments.
Solutions & fields of action
Financial Management 2.0
In an environment marked by economic volatility and rising inflation, insurers are more reliant than ever on precise financial management. Only by identifying weaknesses and risks at an early stage can insurers initiate effective countermeasures and ensure long-term stability. Efficient budget management and forward-looking strategic and investment planning are becoming increasingly critical in the light of rising cost pressures. At the same time, digital technologies such as artificial intelligence, big data and automation are improving the quality and availability of financial data – thereby laying the foundation for reliable management in a complex market environment.
We combine planning, analysis and forecasting to provide a holistic management approach that enables future-oriented action. By applying data-driven methods, we optimize the evaluation of financial developments, refine forecasts and strengthen both operational and strategic alignment. Through the targeted use of forecasting, simulations and modern technologies, we enhance financial control and enable flexible, interactive decision-making. Precise cost controlling ensures transparency and provides continuous support in identifying and leveraging opportunities for long-term cost reductions. To make this possible and to ensure that decisions are based on sound and reliable information, we use a central data repository that includes financial, risk and management data.
Capital investment
Investment specialists in the insurance sector are operating in a politically and economically challenging environment. Market volatility is increasing, and the attractiveness of asset classes is changing. In light of large-scale investment programs, alternative asset classes and investment types are also expected to gain importance. Moreover, investment units are facing increasing pressure due to a steadily growing range of responsibilities, greater complexity, and a shortage of qualified personnel. Another trend observable in the market is that many insurers’ investment units are evolving from pure asset administrators into active providers of investment solutions – even beyond their own corporate group.
Given these conditions, insurers should focus their investments on a few strategically important areas. Optimizing capital investment in terms of return and risk, i.e. the further development of the asset/liability management and strategic asset allocation approaches, is essential. Further professionalization and increased efficiency of the investment organization can be achieved by digitalizing the investment process, outsourcing selected tasks and restructuring the relevant decision-making bodies. Considering new asset classes such as private equity, private credit and infrastructure offers insurers opportunities to enhance their own risk/return profile.
ESG (Environmental – Social – Governance)
Today, insurers can no longer afford to overlook sustainability: ESG aspects play a central role at a strategic level, in risk management, capital investment and across the operating model. In addition to climate change and the resulting physical and transition-related developments, opposing political and social dynamics are increasingly coming to the fore.
As part of their ESG strategy, insurers must clearly define their position and identify corresponding areas for action: KPI-based ESG management makes progress towards strategic goals both measurable and manageable and is essential for a robust ESG approach. Integrating climate change scenarios into risk management strengthens the resilience of the business model. Embedding ESG considerations into capital investment, product development and sales can unlock additional potential and support market differentiation. As part of a holistic ESG approach, we also provide support for other topics such as biodiversity loss as well as specific ESG-related issues.
Regulations and compliance
Ongoing regulatory changes and increasing complexity present significant challenges for insurers. Technical and subject-matter developments require the continuous enhancement of internal control systems and risk management processes to ensure reliable and efficient regulatory compliance. At the same time, efforts to harmonize regulatory requirements are becoming increasingly important.
We support insurers in implementing regulatory requirements efficiently and with a future-ready approach. Our extensive experience from numerous regulatory projects in the financial sector enables us to implement regulatory changes in a tailored manner. We enhance the effectiveness of compliance systems by optimizing data management and processes and by making targeted use of automation technologies. Modern data analytics tools enable the identification of risks and regulatory breaches, allowing for targeted and timely responses. This allows us to reduce compliance risks and strengthen the foundation for a resilient insurance business.
Target Operating Model
The Target Operating Model provides the structural framework within the finance function to enhance efficiency, manageability and future readiness in the insurance sector. Traditional structures are increasingly giving way to flexible collaboration models that enable faster decision-making and greater adaptability to dynamic market conditions. Digitalization creates the basis for modern data architectures and innovation, primarily by replacing outdated legacy systems.
Our approach focuses on reorganization by consolidating management-relevant functions and establishing interdisciplinary teams. We leverage automation and targeted benchmarking to unlock efficiency potential within the finance function. Moreover, we maintain a clear focus on a future-ready, cloud-based system and data architecture that supports real-time reporting and the strategic use of artificial intelligence.
