ratios and unit resource costs and the model predicts their line item expenses; they can either accept them or amend them. This approach is called ‘driver-based budgeting’.

Corporate Performance Management in a Single Solution

Despite being inter-related, these three pillars of corporate performance management are typically carried out in disparate systems. The correct approach for insurers is to use a single performance management system for strategic planning, budgeting, and activity-based costingThe Three Pillars of Corporate Performance Management for the Insurance Sector

"Change" is the watchword for the insurance sector. Increasing customer churn and pressure on premiums are eroding profitability, highlighting the need for significant cost reductions in the areas of customer acquisition and service. This threatens the traditional operating model as organizations re-evaluate current routes to market and redesign internal processes in the never-ending search for greater efficiency.

Faced with the need for change, many insurers recognize that they are ill equipped to provide executives with the management information required to restore and maintain the desired level of profitability. For insurers there are three core financial management processes:

Cost and Profitability Analytics
Many insurers are not able to report on product, customer and channel profitability with the frequency they desire, even though this information is critical for decision-making at both strategic and operational levels

Long-Range Financial Planning
In today’s markets, strategic planning models need to be refreshed and evaluated with increasing frequency. This means routinely updating assumptions about both the external and internal drivers of profitability. Because many of these critical pieces of information such as customer attrition rates and unit costs reside in other applications, this is not always easy. Stand-alone, long-range planning models therefore compromise an organization’s ability to continually review and test assumptions that underpin strategy.

Operational Planning and Budgeting
Many organizations recognize that their annual planning and budgeting process is laboriousness, costly and rapid obsolete. This is because operational managers first model the demands facing their department to identify their resource requirements and then calculate the cost of these resources; all of this done on spreadsheets outside the core budgeting application.

Incorporating this off-line modeling and joining the pieces together with rules that span departments and time-periods transforms planning and budgeting. Managers simply review and update non-financial data such as sales conversion rates, loss ratios, staff productivity ratios and unit resource costs and the model predicts their line item expenses; they can either accept them or amend them. This approach is called ‘driver-based budgeting’.

Corporate Performance Management in a Single Solution

Despite being inter-related, these three pillars of corporate performance management are typically carried out in disparate systems. The correct approach for insurers is to use a single performance management system for strategic planning, budgeting, and activity-based costing.ey are ill equipped to provide executives with the management information required to restore and maintain the desired level of profitability. For insurers there are three core financial management processes:

Cost and Profitability Analytics
Many insurers are not able to report on product, customer and channel profitability with the frequency they desire, even though this information is critical for decision-making at both strategic and operational levels

Long-Range Financial Planning
In today’s markets, strategic planning models need to be refreshed and evaluated with increasing frequency. This means routinely updating assumptions about both the external and internal drivers of profitability. Because many of these critical pieces of information such as customer attrition rates and unit costs reside in other applications, this is not always easy. Stand-alone, long-range planning models therefore compromise an organization’s ability to continually review and test assumptions that underpin strategy.

Operational Planning and Budgeting
Many organizations recognize that their annual planning and budgeting process is laboriousness, costly and rapid obsolete. This is because operational managers first model the demands facing their department to identify their resource requirements and then calculate the cost of these resources; all of this done on spreadsheets outside the core budgeting application.

Incorporating this off-line modeling and joining the pieces together with rules that span departments and time-periods transforms planning and budgeting. Managers simply review and update non-financial data such as sales conversion rates, loss ratios, staff productivity ratios and unit resource costs and the model predicts their line item expenses; they can either accept them or amend them. This approach is called ‘driver-based budgeting’.

Corporate Performance Management in a Single Solution

Despite being inter-related, these three pillars of corporate performance management are typically carried out in disparate systems. The correct approach for insurers is to use a single performance management system for strategic planning, budgeting, and activity-based costing refreshed and evaluated with increasing frequency. This means routinely updating assumptions about both the external and internal drivers of profitability. Because many of these critical pieces of information such as customer attrition rates and unit costs reside in other applications, this is not always easy. Stand-alone, long-range planning models therefore compromise an organization’s ability to continually review and test assumptions that underpin strategy.

Operational Planning and Budgeting
Many organizations recognize that their annual planning and budgeting process is laboriousness, costly and rapid obsolete. This is because operational managers first model the demands facing their department to identify their resource requirements and then calculate the cost of these resources; all of this done on spreadsheets outside the core budgeting application.

Incorporating this off-line modeling and joining the pieces together with rules that span departments and time-periods transforms planning and budgeting. Managers simply review and update non-financial data such as sales conversion rates, loss ratios, staff productivity ratios and unit resource costs and the model predicts their line item expenses; they can either accept them or amend them. This approach is called ‘driver-based budgeting’.

Corporate Performance Management in a Single Solution

Despite being inter-related, these three pillars of corporate performance management are typically carried out in disparate systems. The correct approach for insurers is to use a single performance management system for strategic planning, budgeting, and activity-based costingdgeting process is laboriousness, costly and rapid obsolete. This is because operational managers first model the demands facing their department to identify their resource requirements and then calculate the cost of these resources; all of this done on spreadsheets outside the core budgeting application.

Incorporating this off-line modeling and joining the pieces together with rules that span departments and time-periods transforms planning and budgeting. Managers simply review and update non-financial data such as sales conversion rates, loss ratios, staff productivity ratios and unit resource costs and the model predicts their line item expenses; they can either accept them or amend them. This approach is called ‘driver-based budgeting’.

Corporate Performance Management in a Single Solution

Despite being inter-related, these three pillars of corporate performance management are typically carried out in disparate systems. The correct approach for insurers is to use a single performance management system for strategic planning, budgeting, and activity-based costingratios and unit resource costs and the model predicts their line item expenses; they can either accept them or amend them. This approach is called ‘driver-based budgeting’.

Corporate Performance Management in a Single Solution

Despite being inter-related, these three pillars of corporate performance management are typically carried out in disparate systems. The correct approach for insurers is to use a single performance management system for strategic planning, budgeting, and activity-based costing. This system needs to allow users to develop linked models that cover different functionality across different parts of the organization that can easily be consolidated for enterprise-wide reporting.

Delivering this functionality seamlessly in a single solution both reduces the administrative overhead in the Finance function and improves the transparency, timeliness and integrity of management information. With one version of ‘the truth’, Finance can reconcile the strategic, financial and activity-based views of the organization into one over-arching performarnce management framework.