Office of the Insurance CFO: Driving Business Decision-Making

Office of the insurance CFO:
Driving business decision-making
An Economist Intelligence Unit report sponsored by SAPPreface
Office of the insurance CFO: Driving business decision-making is an Economist Intelligence Unit report sponsored by SAP. The Economist Intelligence Unit's editorial team conducted the interviews and wrote the report. The findings and views expressed in this report do not necessarily reflect the views of the sponsor. Dan Armstrong was the editor of the report. Our thanks are due to the interviewees for their time and insights.
January 2008Office of the insurance CFO: Driving business decision-making
Driving business decision-making
s in other industries, the office of than half of their efforts on traditional transaction the insurance chief financial officer processing and reporting, Mr Burke asserts. has taken on new importance in a world where "Processing the transactions and closing the books A"transparency" is the watchword, and company should just happen-there's nothing strategic in officers are held personally accountable for the that," he comments. "CFOs need to move beyond propriety of financial decisions. But compliance is that to collecting and analysing data and making only one piece of the new responsibilities facing the smart business decisions to drive growth strategy." CFO: Insurers face a changing business environment where globalisation, changing consumer demands and non-traditional competition is driving demands "CFOs have traditionally been focused for both cost control and increased performance. on revenue, but they now need to be No longer is finance judged solely on administrative tasks like reporting and transaction management. involved much more closely in observing Instead, CFOs are increasingly expected to provide strategic insight based on hard data-both financial the operational side of the business, and operational-and meaningful metrics. even as far as understanding product Many insurers are finding it difficult to transition from a "rear-view mirror" approach driven by post- line shifts and what those mean for their hoc standard financial reporting, according to John competitive identityBurke, vice president, insurance solutions for North America, SAP. "CFOs have traditionally been focused John Burke, VP insurance solutions, SAPon revenue, but they now need to be involved much more closely in observing the operational side of the business, even as far as understanding product line shifts and what those mean for their competitive That is not a new approach at Travelers, where the identity," he says. essence of the finance function is to provide insight, Even if CFOs are aware of the need to change, according to the property/casualty insurer's CFO, Jay they often lack confidence in their ability to do Benet. "It's one thing to be responsible for putting so, according to Mr Burke. Citing recent research financial information together; it's quite another conducted by IBM Business Consulting Services, he to really understand it and gain insight from it, claims that 60 percent of CFOs see themselves as blending our perspective with that of our business less than effective in managing performance and partners in marketing, product development and that 70% would not describe themselves as highly senior management," he says. "We are a very effective in supporting growth. numbers- and results-driven organisation, and Moreover, finance departments still spend more finance is at the heart of the information flow."
© The Economist Intelligence Unit Limited 2008 Office of the insurance CFO: Driving business decision-making
The reality of today's regulatory compliance The technology upon which Travelers' CFO's regime is felt as keenly at Travelers as anywhere else, office depends is an amalgam of systems of Mr Benet suggests, but it is seen as a foundation or varying vintage, but Mr Benet says the carrier's due-diligence baseline in support of finance's more IT organisation does an excellent job of ensuring strategic role. access to data. "Generally speaking, if we want Since the early 1990s, Travelers has tracked access to something, we can get it," he says. Where business metrics from the bottom to the top novel information points are sought, finance works of the organisation. For example, it monitors with IT to configure new information flow... [download for more]