The first wave of Finance Transformation focusing on parallel reporting, standardization and harmonization of finance processes and systems, has not yet been completed by most insurance companies.
Nevertheless, new regulatory and reporting-related changes are already triggering the next wave of transformation.
This second wave (Finance Transformation 3.0) is being triggered by new regulatory and legal requirements of Solvency II, IFRS 4 and IFRS 9. It calls for an increasing end-to-end view of reporting, based on inter-divisional analyses. The new evaluation of insurance contracts according to IFRS 4 Phase II, has an impact on product management and legacy systems, as well as actuarial and other calculation systems.
Currently, most companies try to deal with the above-mentioned topics and further regulatory provisions, by limiting their focus to single divisions (even though it may ultimately lead to higher costs, effort and coordination challenges). The reason for this mainly independent treatment, lies in the complexity and diversity of external provisions, as well as a widespread ‘silo mentality’ within the involved divisions (which can hamper the adaptability required for sustainable future success).
In order to gain a clearer picture of the current situation, BearingPoint conducted a survey involving almost 20 interviewees to assess the concrete impact of regulatory changes, including the state of readiness of insurers (e.g. need for action).
The study focused on the technical and functional governance, processes, system landscape and the corresponding target finance risk architecture.