Insurance industry CFOs lead the charge on digitization

Insurance company CFOs have long been responsible for organizing and analyzing the financial numbers and for managing organizational costs. But their role is rapidly expanding, with the insurance CFO increasingly becoming the “CFO plus.”  Accenture’s research with CFOs found they are pushing beyond the borders of the finance function, proposing and shaping business models throughout the enterprise.  And, in many cases, CFOs are leading the organization in deciding how to invest in digital.

Remaining competitive

Accenture researchers found that even the most established firms are challenging and reimagining their business models — often in response to the new threats posed by insurance technology (InsurTech) firms and other “digital native” competitors — and are using disruptive technologies to generate new value through data.

This is a big change. In the past, some insurers hesitated before embracing digitalization, and this restricted the value they could derive from data.

Accenture found that insurance company CFOs are quite enthusiastic about disruptive technology, especially when compared to CFOs in other industries.  For example, 45% of the insurance CFOs surveyed said that insight into and understanding of new technologies is essential for CFOs today; that was the highest percentage of any industry surveyed.

Inherent transformation challenges

Adopting new technologies can be an accelerator for profitable growth, but insurance CFOs face significant hurdles inside and outside the organization when it comes to making needed investments. These include:

• Concerns about the cost of innovative technology investments are ever-present.
• Information security. Insurance CFOs are more likely than those in other sectors to say that information security is a principal barrier stopping them from adopting the automation tools that would free up their time.
• Sophisticated data analysis calls for specialist skills, so it is not surprising that hiring and upskilling talent to execute advanced analytics and deploy advanced tools is a major focus for insurance CFOs.

Times are changing

The good news: These hurdles can be overcome with the right focus. The market is moving now and there are good opportunities for CFOs to collaborate with others across their organizations and invest in emerging technologies.  Our interviews with insurance CFOs indicated that many are well along the right path to harnessing data and innovative technologies — what we call “the New.”

Here are four key steps that these CFOs can take to help their organizations get ready for massive change:

1. Create a powerful case for emerging technologies. CFOs are trusted stewards of the enterprise. By fully understanding the potential of new technology and articulating its benefits to the rest of the organization, that potential can rapidly translate into momentum and scale. CFOs are in a unique position to shape change across the enterprise and can lead by example by digitizing their own function first, helping to take out costs within their own domain.
2. Leap-frog, don’t dabble. Insurance businesses are accelerating their adoption of new technologies in finance, but some are reluctant to move beyond small-scale applications. For new technologies such as AI and machine learning to fulfil their promise, the CFO should encourage the organization to adopt a new mindset — one that is willing to experiment and adapt quickly to change. This again represents an opportunity for CFO’s to lead by example within Finance.
3. Collaborate for data. Many insurance CFOs also see themselves as natural stewards of data within the business, but this can only be possible with the cooperation of other functions, the creation of more holistic ecosystems, and/or the purchase of third-party data.
4. Rethink the skills challenge. Little is possible without the right talent, yet the industry is struggling to get the skills it needs. Insurance CFOs should consider how they can inspire a wider range of talent to enter the industry and explicitly focus on advancing data and analytics skills as part of this agenda.

Insurers are going through a massive transformation.  To compete effectively with newcomers as well as established players, they are seizing new data-driven opportunities, reinventing heritage business models, and rebooting their workforces. Insurance CFOs are looking forward, not backward, to create insurance organizations that are well-suited for the digital future.

Chris Johnston is a managing director in Accenture’s Finance & Risk practice in North America. He can be reached via LinkedIn.

These opinions are the author’s own.

See also: Top insurance technology issues nagging at industry leaders