Accenture’s recent research on the post-digital world for insurance companies outlines several areas where top players in the insurance industry are currently investing to ensure their products “fit in every moment.”[1] Technology is playing a key role in determining and delivering on customer needs. As companies target new opportunities, they evaluate disruptive technologies that could propel them into the post-digital world.
This evolution requires a strategic commitment to focus on core competencies—the catalysts for ensuring customer loyalty and satisfaction. The evolution also requires a substantial financial investment, which means that firms must assess trade-offs and choices as they place bets on which initiatives will help them write the next chapter in their history. Part of that analysis includes the review of the support model for the general account—accounting and investment operations—which includes whether to designate operations as a core competency, and whether operations are functioning at the highest level in support of the firm’s growth strategy.
Like many firms in the traditional asset management space, insurance companies are performing strategic reviews when it comes to the operations that support their general account and regulatory reporting capabilities. These assessments provide an opportunity to benchmark the firm’s general account operations to peers and determine the future operating strategy based on the firm’s growth plans. Below are two key questions that must be considered.
Question #1 – Are Accounting and Operations Keeping Pace?
According to Accenture’s research, 96% of insurance executives indicated that the pace of innovation in their organizations has accelerated. [2] Innovation often means new products, changes in trading strategies, and data supporting both. The challenge for many insurance companies is confirming the accounting and operations teams can keep pace with the change. Are operations supported by legacy technology and highly manual processes? If so, a review may be in order. The solution set might include upgrading technology, revising the operating model, outsourcing or some combination of the three. The right answer for each firm emerges after a thorough assessment of the following:
- Current requirements—where are the risks and pain points today and what is required to mitigate them?
- Future strategy—how can the right flexibility be built to nimbly support changes in the firm’s investment strategy?
- Execution risk—does the firm have the wherewithal to pull off the scope of the recommended change?
Question #2 – Does the Chief Investment Officer Trust the Data?
The first thing Chief Investment Officers (CIOs) at insurance companies do with data is: trust it. If the starting point of a firm’s data is anything less than complete confidence, an operational review may be in order. In cases where the CIO does trust the data, it is important to ensure that extraordinary measures are not taken to provide that level of certainty! Raising the confidence level in the data requires the right assessment process that includes documenting the data management lifecycle, key inputs and outputs. In addition, the current and future requirements of business and technology stakeholders should be captured. As the data management operating model emerges, it is important to consider four pillars of the solution:
- Data architecture—determine the enterprise’s models and policies
- Data governance—assign ownership and quality controls
- Organizational requirements—balance functional alignment and people
- Partnerships—assess vendor and deployment options
The Time is Now
To help establish a differentiated and sticky relationship with customers, insurance companies must adopt leading digital capabilities. The proper allocation of scarce investment dollars is required. Now is the time for insurance companies to begin a thorough evaluation of their firms’ core competencies. This could enable companies to establish a foundation of core competencies and double down on investments that drive meaningful customer engagement while improving operational capabilities.
