In recent years, the burgeoning and sometimes contradictory information needs of regulators, rating agencies, analysts and other financial stakeholders have left insurers fighting to deliver more from their already strained reporting processes. IFRS 17 will only ramp up the pressure as companies are forced to revisit their core reporting processes and underlying calculation engines in anticipation of the new global accounting standard’s 2021 implementation date.
Many companies are limping along with a patchwork solution, with processes that rely extensively on manual inputs and that generate output reports in multiple formats.
What’s largely taken a back seat are underlying issues such as time creep, resource inefficiency, key person risk, lack of controls and governance, limited validation and rising costs. Ultimately, companies will need to bring the situation under control – many sooner rather than later.
The road to transformation
Solutions are complicated by the notorious difficulty of transformation projects, not to mention the expense. Typically, however, successful transformation projects have three essential and overlapping elements – effective tools (systems), engaged people and a fit-for-purpose process. And a blend of all three is needed, whether at the beginning (to enhance the chance of success), during (to manage it effectively), or at the end (to ensure the good work continues) of a project. With that in mind, nine guiding principles for process transformation projects should prove useful:
Tip 1 – Be clear on the objective
Projects can flounder because they lack a clear purpose at the outset. Just as important is to avoid framing an objective based on the current way of doing things. If the objective is to construct a fundamentally different process, then detailed process maps of the status quo are of limited value.
Tip 2 – Get the right people
Process transformation involves a complex, multi-disciplinary programme, requiring a variety of skill sets: creativity; systems knowledge; people who understand the work methodologies and flows; and project management. Combining talent from different sources to get the right people in the right roles may mean a bit more overhead, but it definitely reduces project delivery risk.
Tip 3 – Buy versus build?
Companies may be tempted to start building new systems and processes, but do-it-yourself building projects don’t usually turn out that well. So, it’s nearly always more efficient to buy into vendor solutions and focus efforts on how to implement those.
Tip 4 – Leverage technology
The process must be quick, stable, repeatable and controlled. Pay-as-you-go cloud computing can fill power gaps and workflow management technology can limit the manual interventions that frequently cause growing reporting pressures.
Tip 5 – Take people on the journey
Often underestimated, the people element of the reporting process should include: new organisational design; revised job descriptions; training plans; key person risk planning; and impacts on performance targets
Tip 6 – Manage interactions with other corporate initiatives
The transformation project is unlikely to be the only strategic programme in which the company is engaged. So, it is critical that it dovetails with other related business initiatives.
Tip 7 – Reap the benefits
Companies that have invested the money, time and effort to implement a reporting process transformation project with a well-defined objective want to be certain that they enjoy lasting benefits. The new process should be introduced in manageable stages of sufficient scale to drive headcount reduction and free skilled staff for reassignment on more productive activities.
Only when a company has stopped using old, redundant tools, terminated surplus software licences, and eliminated inefficient, outmoded processes, should the project be considered closed.
Tip 8 – Preserve the investment
Companies need to think about whether the organisation structure, role profiles, skills mix and rewards support longer-term needs. Periodic health checks, including reviews with vendors, are also an important part of establishing a control and continuous improvement cycle.
Moreover, the technology on which reporting processes rely will inevitably change. Historically, insurers have faced painful periodic spikes in technology costs. Pay-as-you-go cloud computing options, software-as-a-service delivery models, and artificial intelligence and machine learning capabilities can increasingly help address this issue.
Tip 9 – Celebrate success
Successful reporting process transformation isn’t easy — hard work should be celebrated when it pays off.
This article consolidates a recent series of blog posts, visit Willis Towers Watson Wire to read the first post: Avoid a reporting crisis: Useful tips – part 1
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