Finance reshaped: Four key themes from the EY Insurance CFO Summit

CFOs are ready to adopt a more strategic role in helping the business unleash growth in a complex and volatile market landscape.

In brief

• At the Insurance CFO Summit 2024, hosted by EY EMEIA Financial Services, senior finance leaders outlined their strategic priorities and biggest challenges.
  
• Increased data management capabilities, more advanced technology and new types of talent are critical to driving successful transformation.
  
• Using artificial intelligence (AI) to strengthen financial planning and analysis and streamline compliance with insurance regulations is a top priority.
  

Chief financial officers (CFOs) across the insurance industry have full agendas today, with many intersecting and overlapping priorities. Helping the organization seize compelling growth opportunities is challenging in light of macroeconomic uncertainty and intensifying regulatory requirements in many jurisdictions. Digital transformation and optimization of the finance operating model are critical to creating new capacity and meeting increased demand for insights and data. There is ongoing competition for scarce talent as CFOs seek to evolve from a primarily “scorekeeping” role to providing strategic decision support and proactive guidance for the business.

Those were among the key priorities raised at a recent insurance industry event hosted by EY EMEIA Financial Services, which brought together CFOs and other senior finance executives from more than 70 carriers in the EMEIA region and globally. The dialogue focused on the shifting business context, including new risks, technological advancements, regulatory changes and other pressing matters on the agendas of senior finance leaders.

Many participants and panelists emphasized that now’s the time for finance to get involved with – and even lead – transformation efforts. As one CFO said, "Finance functions can't sit on the sidelines and mark other people's homework. We need to be actively involved."

Several panelists spoke of the need to manage a wide range of responsibilities and increase capabilities in key areas, including financial planning, forecasting and analysis (FP&A), the use of predictive analytics, and more efficient and effective compliance with insurance industry regulation. More direct engagement with the other C-suite stakeholders is another priority. This article recaps key themes defining the insurance market today and therefore demanding the attention of CFOs.

1. CFOs and the growth agenda in the insurance industry

After a few years of relatively strong performance, growth is top of mind for many European insurers. The opportunities start with emerging risks and protection gaps, particularly around climate, cyber and retirement savings.

Demographic shifts are exacerbating the huge shortfall in retirement savings, which regulators are looking for insurers to make up. New products, services and experiences will be required, because more than half of UK and European citizens do not believe they have access to adequate advice or the right products to save for retirement. Markets around the world are experiencing similar trends.

3. Transforming the finance organization and value chain with data, tech and AI

The finance operating model of the future will be fully digital. CFOs are largely bullish on the promise of AI in finance. Specifically, they see how AI, along with other data-driven technologies, can automate many administrative processes (e.g., compliance, reporting) currently handled via manual interventions or inefficient workarounds. Integrating AI into key finance processes can reduce both costs and the risk of human errors. It also enables finance teams to focus on high-impact activities (e.g., performance analysis, scenario modeling, advising the business).

The cost of leading-edge data solutions has decreased, making them more accessible and increasing the urgency for CFOs to advance their analytical capabilities. The transformative potential of AI extends to the entire insurance value chain. For instance, AI can help develop, distribute and support the flexible and personalized products and services (e.g., robo-advice for mass and mass affluent segments seeking guidance on retirement income and financial wellness) necessary to engage new customers.

Another senior leader emphasized the value of retiring outdated technology to improve efficiency, reduce costs and cut through unnecessary complexity. The good news is eliminating these systems greatly lowers IT maintenance costs, freeing up resources to invest in innovation.

4. Leading change by refreshing talent and energizing the culture

One CFO from a digital insurer pointed out that “digital transformation is not just a technological upgrade but a comprehensive change that involves rethinking customer engagement and organizational culture to achieve sustainable growth.” It’s also important for CFOs to look at their talent strategy. With automation and AI removing manual effort and roles and with different skills and career paths needed to support the functions that are emerging—clear, practical plans are needed to train, develop and retain talent.

Fundamentally, that means infusing data science, analytical expertise and other skills, leveraging new data platform capabilities to re-engineer and reimagine core processes and then reorganize resourcing around these new processes. Upskilling and reskilling programs are necessary to adopt new technologies and embrace more collaborative ways of working. With the automation of journal entries, reconciliations and other tasks, spreadsheet “black belts” will need to become more comfortable working with AI copilots.

The pressure to balance transformational change and operational stability has put a premium on CFOs’ leadership skills. A supportive work environment, along with career development and learning opportunities, is necessary to retain talent. Younger workers are looking for more diverse experiences and relatively rapid advancement and so are less likely to stay with one organization for long periods of time. CFOs must also be prepared to address the concerns of workers who view AI as a threat to their jobs. Instead, they should aim to create excitement about AI’s upside (e.g., freedom to do more strategic work).