A major European insurer has demonstrated how a well-constructed reporting process transformation project can reap significant benefits when dealing with proliferating and ever-tighter deadlines.
Over a recent series of blogs, we’ve highlighted the growing pressures on insurers’ reporting processes and how we believe that effective solutions rely on a three-way harmony of systems, people and processes. We’ve encapsulated the lessons learned from working with insurers on a number of related projects into several tips for the beginning (to enhance the chance of success), during (to manage it effectively), and the end (to ensure the good work continues) on a project.
So, what happens when you turn to transforming words into reality?
In the case of one major European insurer, it faced being unable to meet the shrinking reporting deadlines set for the Solvency II working day timetable ahead of full implementation in 2019. The need to find a resolution to the situation therefore naturally formed the central objective for reporting process transformation, although, as is common in these kinds of projects, it also wanted to target other improvements, such as cost control and higher quality output.
Acceleration vs. improvement
When Willis Towers Watson got involved, initial plans for the transformation intermingled a number of acceleration tasks (typically using technology to speed them up, but without changing the underlying function) and improvement tasks (changing the way something works and, potentially, the result produced). The sequencing had resulted in three key acceleration tasks that were critical to meeting the Solvency II working day timetable being left until the end of the project. As a result, there was significant and largely avoidable project delivery risk.
The plan was re-sequenced to focus on acceleration first. The first step of this was a four-week design phase in which core principles of the revised process were also established, so that it would be event- driven, not user-driven, and that more importantly, spreadsheets would only be used as a display tool, such as to facilitate results validation.
Implementation took place over six weeks and involved re-engineering of both the end-to-end actuarial process and the stochastic model execution runs that generate the regulatory numbers. Both use DataValidator and RiskAgility FM to check data and run models, with Unify orchestrating the workflows and capturing the audit trails with minimal need for human intervention. A big advantage of having Unify in control is that the reporting cycle can go on 24/7. Notably, although some modeling processes had been identified as prime targets for improvement, the initial focus remained on accelerating them.
As well as yielding the majority of speed improvements, the early introduction of new technology enabled greater system agility, helping to understand where subsequent process improvements could have the most impact. It also freed up analyst time for value-adding activity and embedded the technology early so that employees could more easily adapt to and shape the overall process transformation.
The employment of this ‘technology first’ approach had a huge impact. The elapsed time for the end-to-end actuarial process reduced by more than 50%. The duration of stochastic modeling runs was also halved. In both cases, the human input in to the model runs was reduced to deciding what actual runs to do.
To ensure the gains don’t subsequently drop off, the attention paid to having a fit-for-purpose process and keeping the people on board with the changes has also been critical. The bottom line is that this insurer is now well placed to meet the ongoing demands of Solvency II working day timetable. And the freed up employee time can now be redeployed on more value-adding activities, such as achieving its wider process transformation objectives, as well as preparing for new requirements such as IFRS17.
Richard Waller and Joyce Simmons are directors in the life insurance risk practice at Willis Towers Watson.