Navigating Transformation: Key priorities for Insurance CFOs in an evolving sector

With rising customer awareness of risks and pricing, insurers are prioritizing engaging experiences with differentiated products, and need CFOs to become more open, accurate, responsive, transparent, and efficient. Where should CFOs focus their transformation efforts to achieve these goals?

Significant dynamics are driving long-term shifts in the insurance industry. Pressured by geopolitical, financial, and compliance challenges, Insurance carriers are concentrating on personalised services and delivering superior customer experiences.

The key industry trends impacting insurance CFOs include:

• Customers’ expectations: Customers seek a seamless experience, including touchless underwriting and claims processes, alongside options like embedded insurance and usage-based insurance
• Financial wellness solutions: With an aging population and growing financial risks, there is a demand for bespoke coverage that addresses individual needs
• Rising loss values and insurance costs: Partnerships, technology, data mastery, and new-generation AI are needed to improve underwriters’ pricing accuracy, decision-making, loss inspection, and proactive risk management
• Technological investments: Sustained investments in intelligent automation, omnichannel distribution, and cloud solutions are reshaping the insurance ecosystem.

To face these industry trends, CFOs are expected to be increasingly open and responsive, bringing enhanced analytics, timeliness, accuracy, and better experiences while driving cost savings, flexibility, and scalability through:

• Strategic Business Partnerships, spanning beyond transactional finance & accounting services with more strategic and quality services to enable the business to anticipate, understand and react to changing conditions; and increased involvement into business discussions through an efficient servicing of insights
• Intelligent capabilities, expanding data and insights with
  • Fast, accurate, integrated & dynamic finance insights grounded on robust data and one version of the truth
  • Advanced analytical capabilities spreading the access to scenario analysis and contextualized predictive analytics
• Nimble finance ecosystem and an integrated finance organization with lean, AI-enabled, and scalable delivery model, frictionless processes with continuous improvement, and cross functional teams including non-traditional finance skill sets.

Insurance CFOs face the challenge of meeting these expectations while dealing with a complex insurance business model.

Several factors complicate the insurance business model, including:

• Complex product lines: Insurers offer numerous complex products to large customer bases, involving frequent transactions across various business segments, lines of business, coverages, embedded options, terms, and related assets. This adds complexity and increases the volume of financial data.
• Diverse business actors: Interactions and reconciliations are necessary between underwriters, actuaries, claims, reinsurance, insurtechs, brokers, agents, call centers, service adjusters, third-party risk managers, asset managers, or other entities.
• Stringent regulatory demands: Insurers must meet transparency requirements related to capital, reserves, investments, and risk management across numerous disclosures, multiple jurisdictions, with frequent and substantial evolutions, all of which place heavy demands on finance operations.
• Coexisting legacy and modern technologies: Many insurers have expanded through acquisitions, resulting in diverse and sometimes conflicting technological infrastructures. This often clashes with the need for agility during business transformation.

Given the complexity of the insurance business model, and the multitude of available solutions, insurance CFOs must prioritize transformation initiatives based on desired business outcomes.

With internal teams driving transformation, IT vendors pushing for large scale upgrades of ledgers, and an overall interest in leveraging AI, prioritization becomes essential. CFOs should begin by answering the following questions:

• What business outcomes am I aiming to achieve?
• How do I craft a compelling business case to gain leadership buy-in?
• How will this impact our operating model?
• What does a successful implementation roadmap look like?

Adopting a business-outcome centric approach involves prioritizing specific, measurable benefits that create long-term value for the organization, its customers, and stakeholders. This approach should align with the organization’s strategic vision and be achievable in the foreseeable future.

Business outcomes Capgemini typically help CFOs achieve include:

• 20-40% reduction in finance operating costs
• 20-30% reduction in aged- debt on premiums and claims receivable
• 100% compliance with capital, reserve, and liquidity compliance
• Enhanced decision-making on earnings and expenses, with drill-down capabilities for lines of business, products, policies and financial instruments
• Time to close reduced to as little as three days
• Reduced early payments
• Increased satisfaction among customer, agent, broker, and employees
• A reduced carbon footprint and enhanced sustainability

Next generation operating models for Insurance Finance

Achieving optimal business outcomes for insurance finance operations requires the seamless integration of next-generation operating models across the enterprise, while closely monitoring the realization of these outcomes.

Finance operations in Insurance must integrate with underwriting, actuarial, and distribution, augmenting the function towards frictionless, enterprise-level outcomes. Companies fast-track this transformation when they adopt an outcome-based approach, supported by next-generation technology, artificial intelligence, and a continuous focus on innovation and value creation.

Capgemini’s Digital Global Enterprise Model provides a foundation for defining service catalogs, processes, metrics, service level agreements, controls, grade, location, & competency mix, organizational structure, technology, pricing, and governance.

When it comes to optimizing operations with outcome-generating transformation initiatives, we suggest our E,S,O,A,R, methodology with our clients:

• Eliminate wasteful activities that impact time, cost, and effort.
• Standardize the processes to minimize customization.
• Optimize ERPs/workflows and existing IT landscape.
• Automate standardized processes.
• Robotize remaining manual transactions with additional AI, Machine Learning, and robotics.

Leading practices for core finance functions

CFOs in insurance can adopt leading practices across core finance functions – accounts payable and receivable, controllership, financial planning & analysis, and sustainability reporting, with next generation operating model and governance, enabled by next generation AI.

Key strategies include:

To achieve scalability in insurance finance without the need for operational growth in proportion to premium growth, a clear operating model strategy is essential. Standard organizational models distribute processes across regional centers, shared services, and outsourcing, based on well-defined criteria such as complexity, regulatory requirements, business differentiation, and knowledge-requirements.

An optimal blend of automation and service delivery models enables the size of finance operation to grow more slowly than business itself.

From a functional standpoint, starting with Controllership, which is always a key focus for insurance CFOs, finance should drive to a frictionless, continuous close, with near-real time reporting and analytics:

• Minimal touch integration across insurance, reinsurance, investments, and other operations with highly automated journal entries, reconciliations, intercompany transactions and reporting
• Robust, streamlined, technology-enabled process and control framework, aligned with capital, reserve, and liquidity compliance
• Automated financial, statutory and regulatory reporting with natural language generation and recommendations

On Financial Planning & Analysis:
Finance is expected to be the open, responsive, next -generation business partner with:

• Continuous analysis, interactive reporting, dashboard, and self-service capabilities with enhanced availability, accuracy, and transparency into operational sources
• Advanced planning utilizing predictive analytics, integrated with business and actuarial planning, as well as multi-dimensional, real-time data

On Billing & Collections:
Premium and claims receivables should be collected effectively while leading towards fully automated cash applications and enhanced overall experience for customers, brokers, and agents. This connects activities from setup, billing, and customer service, to payment, with an optimal collaboration of finance with underwriting, claims and operations functions.

On Payables:
Purchase orders should be widespread, with procurement processes and solutions seamlessly integrated. These processes should be augmented with virtual analysts, spend analytics, vendor self-service, and an AI service desk to improve efficiency and avoid early payments.

How is Generative AI coming in the equation for insurance finance?

We have identified 150+ use cases across Receivables, Payables, Controllership, and Financial Planning & Analysis where Generative AI can unlock ground-breaking opportunities. These include unleashing value streams difficult to achieve up to date, and a potential to drive up to 95% of automation rate, reducing time by 90%, cutting costs by 40% per case, while increasing satisfaction and expanding the role of finance and accounting as a strategic business partner.

These opportunities include:

• Self-Service – virtual financial assistants
• Conversation Handling – AI service desks that automate customer and supplier queries
• Intelligent Data Extraction – from policies, invoices, and various types of reports & Insights Generation for predictive analytics and reporting
• Synthetic Data – for financial analysis and forecasting

How should the CFO contribute to the organization’s Sustainability?

The CFO should leverage the finance culture of data extraction, diligence, and business partnership to take strong control of sustainability reporting and management. This involves ensuring granular data coverage and accuracy, including through vendors and investments, to provide comprehensive, auditable, and transparent emissions data. This data will drive compliance and reduce carbon footprint and facilitate sustainability-based decision-making and action.

All the finance processes and platforms mentioned above should be optimized with finance intelligence (to drive actionable insights that predict the future and support frictionless decision-making), digital twin (for process modelling, simulation and mining) and governance risk and compliance solutions. These enhancements will support strategy, enterprise operations, customer experience, and data powered operational transformations.

Capgemini Business Services is a renowned, market-leading finance & accounting operations and transformation service provider delivering on the leading practices elaborated in this article. We are underpinned by a strong tradition of innovation powered by intelligent automation and recognized as such in the market and by analysts.

To learn more about how Capgemini can help you solving the challenges faced by CFOs in insurance contact: Greg Cittanova, Amit Bhaskar or Aneta Szporak
Greg.cittanova@capgemini.com, bhaskar.amit@capgemini.com or aneta.szporak@capgemini.com.