Insurers Globally Cite Complexity of Operations as Barrier to Fast, High-Quality Decisions, Says Economist Intelligence Unit Survey
Over Three-Quarters of Insurance Executives Say Their Firms Have Turned to Financial Process Automation to Improve Integrity of Information
NEW YORK .- In the wake of the financial crisis, insurers are struggling with process complexity, data inconsistency and systems incompatibility, all of which are preventing them from gaining an enterprise-wide view of risk, according to Embedding governance, risk and compliance in the insurance industry, a survey and research paper from the Economist Intelligence Unit, sponsored by SAP.
Among those surveyed, 76 percent of insurance executives who attempted to automate financial processes were rewarded with faster processing speeds, fewer control errors and a decrease in the number of poor-quality decisions throughout their processes.
“Process automation used to be about cutting costs,” says Dan Armstrong, senior editor at the Economist Intelligence Unit and the manager of the research. “It’s still about this, but in the wake of the financial crisis, executives are paying more attention to how it can help aggregate enterprise-wide data and manage their businesses better. This is especially true in insurance companies, where there can be an almost paralyzing level of complexity and decentralization.”
The findings were based on the responses of 58 insurance executives globally who were part of a larger 446-respondent survey on governance, risk and compliance conducted in the fourth quarter of 2008 and January 2009. The report also includes interviews with executives at the multi-line insurer Zurich Financial Services and the life insurer Securian Financial.
Additional findings of the research include:
* Insurers’ Issues with Current Financial Processes. The majority of insurers surveyed continue to manage “through the rear-view mirror,” attempting to predict the future solely on past performance, often on the basis of stale reports. Few companies can produce accurate and timely information to support effective decision-making - fewer still have mastered scenario analysis and regular risk stress-testing. While insurers have become comfortable with tools and technologies within operational silos, most have not invested in the capabilities needed to correlate enterprise-wide risk exposures and to track interdependencies.
* Benefits of Automated Insurance Financial Processes. The overwhelming majority of insurer executives surveyed stated that by automating and standardizing their financial processes they expect to improve data accuracy, eliminate error-prone manual processes, provide staff more time to focus on more valuable activities and make decisions faster. The remaining 24 percent of executives cited cost reduction as a key advantage; it ranked fifth overall.
* Barriers to Financial Automation. Efforts to automate processes involve problems and risks of their own, many respondents believe. Almost half of respondents cited cost as a barrier to standardization and automation, and 28 percent cited the difficulty of obtaining approval from independent-minded executives across regions and business lines.
“The nature of the insurance industry makes it difficult for insurers to have an enterprise-wide control of their risk for making smart and fast decisions, which is a common theme throughout the study,” said Leo Schneider, senior vice president, Solution Management, Insurance, SAP AG. “Seamlessly integrated governance, risk and compliance solutions can eliminate fragmentation, enable effective risk management and automate controls. The results are strategic and operational effectiveness coupled with minimized cost of compliance. In other words, it provides support for regulatory requirements, risk mitigation and long-term competitive advantage.”
About the Economist Intelligence Unit
The Economist Intelligence Unit is the world leader in global business intelligence. It is the business-to-business arm of The Economist Group, which publishes The Economist newspaper.
The Economist Intelligence Unit provides geopolitical, economic and business analysis on more than 200 countries, as well as strategic intelligence on key industries and management practices. With over 300 full-time professionals in 40 offices around the world, supported by a global network of more than 700 contributing analysts, the Economist Intelligence Unit is widely known for its unparalleled coverage of major and emerging markets. More information about the Economist Intelligence Unit can be found on the Web at www.eiu.com.
This news content was configured by WebWire editorial staff. Linking is permitted.
News Release Distribution and Press Release Distribution Services Provided by WebWire.