In this penultimate piece in our series we take a look at how FP&A teams, working in companies in the financial services sector, are improving their enterprise planning through digital financial transformation.
Insurance has always been one of the most complex industries from a financial management perspective – and it’s just getting harder. Since the introduction of Solvency II in 2016, all insurers in the European Union must comply with stringent capital and reporting requirements which has meant they have had to revamp and automate processes for data collection, data management, reporting and risk management. By the end of 2016, insurers also had to provide an annual Solvency and Financial Condition Report (SFCR) all at the same time as many were battling with other changes to International Financial Reporting Standards (IFRS).
Implementing Solvency II proved to be a challenge for many insurers particularly when it came to dealing with the complexity of forward-looking financial reporting. Traditionally, much of financial planning, forecasting and performance management focused on the profit and loss account that lacked the deeper insight required to forecast exactly how particular products and distribution channels might perform in the future.
Making the shift from backward-looking reporting toward a forward-looking perspective that requires value-added sensitivity analyses and scenario modelling exposed holes in the inflexible legacy applications. So, inevitably, many FP&A teams resorted to spreadsheets to patch up the gaps, leaving them with labour-intensive processes that are error-prone and notoriously difficult to audit.
the need for new technology
That is no way to continue. If FP&A teams are to deliver on their forward-looking, value-added remit and comply with new waves of legislation, they need more controllable, repeatable and efficient planning processes for forecasting and performance management. They won’t get that unless they adopt new technology, because only then will they be able to:
- Simplify, standardise and accelerate the forecasting and reporting of the profit and loss statement, the balance sheet and the Solvency Capital Ratio.
- Decrease the amount of manual intervention through automating repetitive routines.
- Integrate the key internal and external performance drivers that are needed to support the driver-based planning that will allow them to rapidly assess how material changes are impacting their future financial performance.
- Provide rapid and detailed scenario analyses that enable them to quickly stress test forecasts.
Replacing inflexible legacy systems and banishing spreadsheets by embracing new technology, will also give a more robust and transparent audit trail and provide a collaborative workflow. This will help reduce cycle times and allow users, from both within the finance team and across the business, to double down in analysing and addressing issues. New technology will also allow insurers to model at a greater level of granularity, so they can have the same level of detail in planning models as they have in their actuals.
anaplan delivers connected planning for insurers
New-generation, cloud-based planning solutions, such as that of Anaplan, allow finance, actuarial, and risk management teams move away from silo-ed architectures and collaborate across a single platform will help them comply with the Solvency II and IFRS requirements. Its flexible data structure and ease of modelling mean new reporting requirements can be quickly incorporated without extensive outside IT support, and its in-memory calculation engine provides the speed and robustness to forecasting vast amounts of data on the fly.
The German unit of global insurance giant AXA Group is just one insurer who has benefited from deploying Anaplan to deliver what is now generally labelled ‘connected planning’. Lacking a consistent approach to planning across its various business lines and departments, AXA Germany moved to Anaplan so it could connect its planning processes across the business, eliminating spreadsheet nightmares and improving both process transparency and planning efficiency. As a result, months-long planning routines are now complete in days.
But the Anaplan platform has other uses too. Insurers, such as RSA Group, already use it for modelling premiums, building cost allocation models and to develop workforce planning solutions. This helps them optimise staffing needs of the underwriting, customer services, and claims processing teams, by continuously monitoring the right level of human capacity required under various scenarios and assumptions. Bringing together previously disparate planning solutions to deliver connected planning brings benefits right across the business, giving it the much-needed speed and agility to thrive in the increasingly competitive insurance market.
To learn more download our guide - Connected Planning: Key to FP&A Transformation.
If you like this blog you can catch up on the series or request an alert when the next blog is published.
talk to us today
If you’re interested in seeing how Anaplan can transform Finance, don’t hesitate to contact us. We’ll be able to answer all of your questions and explain the processes we use to bring cohesion and effectiveness to your planning processes.