The global insurance industry is dealing with much change. Its data-heavy business model should be a prime candidate for extracting the immense value promised by technologies such as machine learning, advanced analytics, IoT and AI, but in general the rate and scale of change has been slow.
If data is the new oil, then insurance companies are potentially deep wells of insight into customer, operational, and macro-economic data. In fact, I’d argue the insurance industry is better placed than nearly any other industry to mine data for value and transform their businesses in the process.
Forcing a step-change
When IFRS17 becomes active on January 1st, 2021, global insurers’ business processes will begin to look very different to a few years ago. Complying to the new standards, which have been adopted by insurers in the majority of countries worldwide, will require a rethink of how risk is calculated and reported on, with implications for insurers, policy holders and investors.
It is our view that any compliance requirement is also a potential opportunity for business transformation. The mere act of compliance – especially in the case of IFRS17 – requires a rethink of certain systems and processes. Using this opportunity to build greater agility, streamline processes and increase efficiencies can have far-reaching benefits for years – even decades – to come.
That was certainly the case for one of the world’s leading insurance providers, Swiss Re. The company partnered with SAP on a multi-phase co-innovation project that equipped it with agility, insight and adaptability.
Co-innovation transforms business, builds resilience for future
Seeing the opportunity inherent in the compliance process, Swiss Re and SAP developed a solution that not only ticks the IFRS17 boxes but goes beyond by enabling the insurer to meet the increasingly complex and multifaceted requirements of regulators.
Swiss Re’s financial results were previously produced in a sequential, complex and time-consuming manner based on fragmented information and legacy technology. The company has to report on multiple statutory and branch evaluations across various countries and regions.
Faced with fast-changing market conditions, new competitors, increasing digitisation and growing reporting requirements, the company looked for a suitable solution, but none existed prior to the SAP partnership. Instead of developing one from scratch, it chose to purchase one co-developed by SAP through a multi-phase innovation process.
The first phase of the project was to implement a system based on SAP HANA that addresses the increasingly complex demands related to financial steering and reporting of insurance companies. This established a platform that allows Swiss RE to manage regulatory complexity while easily incorporating new valuations and reporting standards such as IFRS17.
Financial reports and management insights can now be produced faster and leaner, using industry best practice and a powerful IT platform supporting it. This has enabled Swiss Re to:
- Simulate events that affect its accounts
- Create a sustainable solution for the insurance and reinsurance industries
- Conduct business steering based on easily accessible business insights.
Further development phases focused on extending the solution for financial analysis and steering, with forecasting, planning, and simulation for a number of different scenarios planned in future phases.
Swiss Re has shown what is possible when a future-fit outlook and willingness to reimagine and transform business processes meets the expertise and insight of a global technology provider such as SAP. To discuss how your compliance efforts can be elevated to a game-changing business transformation effort, please connect with me @ firstname.lastname@example.org or my colleague Samantha McKay @ email@example.com.
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