More than 440 insurance accounting and finance professionals from a wide variety of insurance companies participated in The 2015 Insurance Investment Benchmark Survey, conducted by Clearwater Analytics. The survey inquired about the common challenges insurance investment professionals face and examined the industry-wide causes of these problems. In this benchmark survey blog series, we present some of the top findings.
Closing the Books
When an organization closes its books each month, it lays a necessary financial foundation for regulatory and internal reporting. Yet according to CFOs and accounting teams, insurers struggle to accomplish this vital task in a timely manner. Manual processes and disparate datasets contribute to delayed close times, way past when the crucial investment data is really needed.
The delays caused by manual processes can make it difficult for investment and accounting teams to assess performance and risk, ensure accuracy, and make effective portfolio decisions. CFOs acknowledge the need for faster close times to address these challenges. In fact, according to Benchmark Survey data, in order to increase operational efficiencies, CFOs indicated their desire to close the books by an average of two days faster. Waiting eight or nine days for month-end board packages to be finalized reduces the value of the information—each day is precious.
To reduce close times and achieve the desired results mandated by management, insurers must overcome a number of challenges. Changing current processes and systems is a crucial step, yet many resist this change because it can be disruptive and painful. However, when we asked if insurers were relying on an investment accounting system that was fully automated, only 56% agreed, meaning that nearly half of all insurers might be able to reduce the problems caused by manual processes by utilizing an automated investment accounting and reporting solution.
If insurers were better able to streamline closing processes, they could focus on improved efficiency overall and quicker decision-making.
What is the driving factor behind the desire to streamline the monthly close process?
As insurers submit period-end and regulatory reports, prepare journal entries, track compliance, assess risk, and make meaningful decisions based on all of this complex data, they must do so even faster, with the utmost accuracy, all in a time of more change and uncertainty than ever. It’s no surprise that, regardless of investment strategy, staff size, or insurance type, all organizations must contend with these operational challenges, and what’s even tougher, determine how to overcome them. The survey makes it clear that eliminating manual processes can be the first step in doing so.
To learn more about industry-wide trends and new best practices, download The 2015 Insurance Investment Benchmark Survey Report.