Written by Li-May Chew, Associate Director, IDC Financial Insights. Li-May can be contacted at: firstname.lastname@example.org
This post expands upon my earlier discussions on IDC Financial Insights’ global insurance study on interdepartmental coordination between risk and finance. I am touching on specifics for the European region, wherein we surveyed respondents specifically from the United Kingdom (U.K.), Spain, France and Germany.
Here, we note that findings closely echo global percentages — respondents are largely cognizant of the benefits of enhanced integration but still figuring out the most optimal level of collaboration. Slightly less than half or 45% have started collaborations between risk with finance, although the majority of them admitted that they are still refining consolidation efforts. Amongst the four European nations, insurers in U.K. are progressing the slowest, with the comparable percentage being 36%. Moving down the spectrum, 34% of the European insurers we spoke with are at advanced stages of planning, which is a step behind collaboration. Furthermore, 14% have some preliminary structure, while just 7% have yet to consider such an alignment.
Our survey revealed that insurers from the European region are most influenced by benefits from greater analytical capabilities and information timeliness and quality. This makes sense, given the region’s generally more stringent compliance landscape and the need to react more swiftly to evolving regulatory mandates.
What are the Operational and Technological Barriers to Improved Risk-Finance Collaborations?
Meanwhile, though there is almost unanimity about the need for coordinated interactions, there remain numerous reasons why several have maintained status quo and have not changed their approach to managing risk and finance. Herein, we are pleased to announce that European insurers exhibited the most confidence globally when it comes to tackling operational and technological barriers to risk-finance integration. Even then, they are still contending with issues such as differences in perspectives and cultures between the finance and risk fractions, the lack of robust data systems, or limitations of legacy technologies which make it cumbersome to implement an integrated platform, as indicated in the above chart.
However, the medium term should witness a heightened understanding of the criticality of such transformational projects, with insurers allocating more funds to pursue stronger risk-finance partnerships. Market leaders both globally and in Europe are already widening their competitive advantage by investing in innovations such as unified data platforms, enterprise information management, and advanced analytics to bolster effective collaborations.
It is obvious that these integrational projects are comprehensive and oftentimes challenging internally. To break through these hurdles, insurers should consider collaborations with specialist vendors with a comprehensive, yet integrated risk-finance data platforms and advisory services.
Integrations between risk and finance continues to be fine-tuned at the European insurers. Stay tuned for my next blog on whether the U.S. market exhibits any different traits.
Download a copy of the IDC Financial Insights’ White Paper: Risk-Finance Collaboration at Global Insurers: A Partnership in Transition.