Deloitte’s insurance expert discusses finance transformation in the Solvency II era

Henri Wajsblat, Anaplan’s Head of Financial Services Solutions, interviews Deloitte insurance expert, Marco Van Ackooij, to learn why finance professionals in insurance need to shift from a traditional backward-looking to a more forward-looking performance management approach.

We have heard a lot about Solvency II in Insurance during the last 10 years. What lessons do you think finance practitioners in insurance have learned from its implementation?

Solvency II has been a very challenging exercise for the insurance industry, significantly impacting the processes of finance and risk management in the areas of data collection, data management, and reporting. Now that Solvency II has been implemented, and in complying with all financial reporting requirements, insurers are starting to realize that they need to transform their finance function and adopt a forward-looking approach to enhanced analytics and business insights. Such an approach would be in line with the intention of Solvency II.

Why is a forward-looking focus so important in finance today?

Before Solvency II, forecasting and performance management processes focused on traditional profit and loss, with limited details, often calculated using spreadsheets. This approach is no longer sustainable in a Solvency II environment, where risk plays an important role in those processes. The increasing demand for multiple forecasts per year, scenario planning, and enhanced insights requires the finance function to focus on forecasting a comprehensive balance sheet and shifting predictions toward risk-weighted assets, liabilities, and required capital. The adoption of Own Risk and Solvency Assessment (ORSA) financial planning principles and scenario analysis will improve finance’s performance significantly, aligning business insights with strategy in an integrated manner.

What technology impacts do you anticipate from this finance transformation?

Technology should be a priority because it can actively support and drive finance transformations. Finance needs a more controllable, repeatable, and efficient planning and performance management process to execute on its value-added agenda. The business requirements of the forward-looking approach will overtake the functionality of existing spreadsheet-based solutions in many areas, including speed, automation, data granularity, drill-down capabilities, “what-if” scenario analyses, driver-based planning, agile modeling, model governance, audit trail, and workflow. New-generation technology solutions leveraging powerful in-memory computing and cloud architecture provide interesting, value-adding functionalities that support the needed changes.

For more information, read Deloitte’s white paper, “Enabling forward-looking reporting in insurance,” and check out the Deloitte ORSA app in the Anaplan App Hub to learn how insurers can improve planning and performance management with the Anaplan platform.