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At the highest level, all insurers are interested in three key elements

■ Operational efficiency – delivered through cost reduction, claims management and productivity strategies.

■ Profitable growth – delivered through profitable customer acquisition and retention, cross selling and upselling.

■ Risk management – delivered through capital efficiency and operational risk management.

Underpinning these three elements is what might be described as a ‘pure play,’ that of financial performance management. It is called ‘pure’ because the analytical approaches used in the Office of Finance are generally transferable from industry to industry. All CFOs are interested in the financial performance of their organization and need to report to stockholders using standardized techniques. In the case of insurance CFOs, there is often less certainty in the figures which invariably make projections for ‘IBNR’ (Incurred But Not Reported), a situation where insurers need to take into account the amount owed by them to customers who are covered for a claim but have not yet reported it, such as in the case of a major weather event. The effect of long tail claims, i.e., claims of lengthy duration, is also an important part of the consideration of the insurance CFO and their team.

Increasingly insurers are gaining greater insight into the convergence of the risk, compliance and financial performance management process. This approach, where data is reused and where reporting software for instance is repurposed, allows insurers to gain added value from the compliance process. It also creates a soft benefit in that it starts to break down the silos of risk and finance that exist in many organizations and increasingly embeds a risk culture into operational decisions.

It is tempting to suggest what are the typical trends for any given segment of the insurance sector, but different trends occur within the industry, in different sectors at different times and in different places. A typical example of this might be the Solvency II initiative in Europe, replicated to some degree in many other locations such as South Africa and parts of Latin America. While Solvency II has been a burning (and non-negotiable) platform, insurers had no real option but to pour in money and resource albeit to the detriment of other programs. For some insurers this represented 80 % of their IT development budget. To that extent, risk and regulation have been at the top of the league table in terms of prioritization, although risk and compliance in Europe are increasingly assuming a ‘business as usual’ status. Although some fine tuning is likely to occur especially around risk reporting, the topic seems less critical at the moment. Even so, there is a school of thought which indicates that now that insurers have crossed the Solvency II compliance ‘deadline’ of January 2016, the topic of risk and compliance will be revisited as insurers drive for improved operational efficiency and cost reduction.

Standard techniques such as PEST and SWOT analysis remain available to insurers to allow them to identify key issues. Such a methodology remains valid although increasingly there is concern that some traditional management school thinking may be slowly becoming out of date due to the nature, impact and speed of change. In such formal techniques, topics such as disruptive technology may be both an opportunity and a threat. Beyond this, the influence of disruptive technology and ‘agile’ change is forcing organizations to re-evaluate their view towards risk management.

Notwithstanding, it is still possible to identify the key business drivers of each industry sector albeit that the prioritization of each business driver may differ at a local level, and these have been tabulated below.

Life and pensions insurance comprises the largest sector representing 60 % globally and usually also at a local level (although there are some exceptions due to local economic considerations and market maturity). Life and pension companies have similar key drivers (Table 1.1).

Table 1.1 Key drivers of life and pension insurers

Healthcare takes on different flavors geographically. Many insurers offer healthcare insurance cover, as well as travel accident insurance. That part of the insurance industry generally comprises two elements with similar business drivers (Table 1.2):

■ Healthcare (wellness)

■ Travel and Accident.

Table 1.2 Key drivers of healthcare insurers

Property and casualty – often known as General Insurance – comprise 40 % of the market, although this is also broken up into subsets such as retail (or personal lines), commercial lines, and specialty lines such as terrorism, marine, fine art and the like.

Key business drivers (Table 1.3) are consistent to some degree although invariably differ dependent on the type of insurance business in operation:

■ Retail

■ Commercial Lines

■ Specialty.

Table 1.3 Key drivers of general insurers

Reinsurers and Captives: Beyond these, there are reinsurance companies who underwrite the primary carriers or cedants, and captive insurers who act only for their commercial owners. Their key business drivers (Table 1.4) are less orientated towards issues concerning the customer and more towards the management of financial performance and risk.

■ Reinsurance

■ Captives.

Table 1.4 Key drivers of reinsurers and captives