Digitisation and regulation top priorities for German insurance executives

Digitisation and regulation are two top themes that will keep financial executives of German insurance organisations busy in the coming years, according to the ‘2025 Agenda of the CFO and CRO’ study by BearingPoint. 

The international management and technology consulting firm surveyed executives of large insurance companies based in Germany, asking them to identify the key trends and developments they foresee in the sector. Across the board, digitisation stands out as the chief development that not only poses the biggest threat to strategies and services/products, but also offers the largest opportunities for business model transformation. Rolf Meyer, who leads BearingPoint’s Finance & Regulatory portfolio for the insurance industry, elaborated: “As automation and robotisation progress, data preparation, analysis and decision-making are becoming increasingly interconnected. 

Robotisation in finance

Robotisation is considered by the overwhelming majority of respondents as a financial tool to further increase efficiency and quality. More than 80% see robotisation as a suitable means of creating space for more value-adding activities. Robotisation can, for example, support fast close. Due to rising regulatory reporting burden and business complexity, companies struggle with closing their financial books in a fast and effective way, against the backdrop of managers and shareholders (and in some cases watchdogs) that are demanding more speedy delivery of financial reports. 

However, insurers at the same time recognise that for robotisation to be effective, they need to integrate the approach deeply into their digital roadmaps and operations, a move which is easier said than done. "Robotisation is a fast and efficient tool and will be a standard tool in the field of (process) automation in the future – but it is not the panacea,” commented Markus Enk, a Senior Manager Finance & Regulatory in BearingPoint’s Insurance practice.

In their operations, insurance companies continue to focus on harmonisation of business processes and integration – both supported by the adoption of modern and more agile systems. Reducing the complexity of infrastructures, systems and applications is therefore an important goal for the majority of executives, in particular in finance and accounting, said Meyer. Outsourcing and offshoring of financial processes and supporting IT – two themes which have long been a dominant topic for cost effectiveness, have dropped down the priority list, displaced by among others automation. 

The rise of digital transformation, a term coined for all change that is driven by technology-led innovation, is changing the organisational face of finance departments. Roles and responsibilities are shifting, and finance professionals are deemed to find closer alignment with IT departments. In addition, the traditional areas of responsibility in accounting and risk management are increasingly shaped by actuarial skills, a movement which was highlighted by more than 90% of the executives surveyed. Enk from BearingPoint: “As a result, accounting is becoming more and more the executive organ, and the submission of evaluations is increasingly being carried out by actuarial experts. In practice, this has led to the reorganisation of accounting under the office of the actuary.”

Regulation

Regulation remains a significant priority in the agenda of CFO’s and CRO’s. Two key regulatory changes highlighted are IFRS 17, which is relevant for global insurance companies, and Solvency II.

In another study among finance professionals, consultants from Enigma Consulting found that treasury teams are struggling with what they see as a mismatch between what they do in practice and what they ideally want to do. While cash management and accounting & reporting typically keeps them most busy, they envisage spending more time on forecasting & planning and financial risk management.