Chief financial officers at insurance companies struggle with data quality and want more automation in order to speed up the process of closing books, according to EY’s annual survey of these professionals.
Financial, risk and actuarial data currently are siloed at many insurance companies, making it difficult for finance leaders to get a “single version of the truth,” according to survey respondents. More than half of the 58 CFOs that responded to EY’s survey said that the complexity of legacy technology environments is their biggest barrier in realizing their goals for fast, accurate financial reporting. The next-most cited barriers are:
- Staff capacity to adapt to change
- Investment required in technology
- IT function too focused on other priorities
- Lack of internal technological skills
“The speed of technological innovation is now presenting an exciting opportunity for CFOs to transform their finance functions and achieve their business priorities,” EY writes. “This wave of technologies — such as in-memory computing, the cloud, analytics, artificial intelligence and robotic process automation — can transform the way that finance adds value and overcome the legacy IT complexity.”
The need for insurers to meet changing regulatory requirements magnifies the shortcomings of current financial technology environments, the survey says. A third of insurers said that “Implementing changes to investment accounting systems, reporting systems and actuarial models” was the most critical area for their organization to address as new accounting and reporting standards loom; a further 16% said “Finding and manipulating the required data to deliver reporting requirements” held that distinction.
“Increasing the speed of close will require significant improvements in data management and reporting tools,” EY writes. “Insurers need to capture more granular data and do so more regularly, then feed this data into management, financial and regulatory reporting.”
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