In the insurance industry, digital disruption is creating new opportunities for risk mitigation, product innovation, and business models.
New technologies are enabling insurers to help their customers better secure property, drive safely, and even live longer. Insurers are adopting automation processes to streamline claims and eliminate redundant tasks. This automation can reduce the costs associated with claims processing by as much as 30 percent, according to McKinsey.
However, insurers cannot truly capitalize on these digital transformation opportunities if they must continue to rely on unnecessarily complex managerial accounting systems and backward-looking analytics. To remain competitive, insurance companies must simplify and streamline their accounting processes. Doing so will provide critical data for advanced analytics and reporting, delivering the insights needed to drive business success.
Challenge: Bridging the Gap Between Transactional and Financial Applications
Many insurance companies continue to use fragmented, homegrown transactional systems to run core processes. This approach requires IT departments to create custom interfaces that flow data to reporting and analytic systems and the general ledger. This accounting situation is further complicated by new regulations that exacerbate the complexities of traditional, monolithic architectures.
Insurers need to bridge the gap between their transactional systems and finance applications. Doing so will reduce the time spent on operational tasks and controls, simplify compliance, and help reduce associated costs. Most importantly, a simplified, streamlined approach will generate multiple financial variations simultaneously, reducing reporting efforts.
Solution: SAP S/4HANA Helps Simplify and Streamline Accounting Processes
The SAP S/4HANA solution for financial products subledger can help insurance companies better address the complexities of traditional, monolithic architectures. At the core of SAP S/4HANA is a multi-GAAP accounting engine. Complementing this accounting engine is a module that supports the preparation of estimated cash flows provided by actuarial upstream systems.
The subledger allows insurance companies to generate multiple valuations and apply financial steering methods based on SAP HANA. Businesses can automate and control processes in a simple, effective way to realize the benefits of financial transformation:
- Manage increasing regulatory complexity by incorporating new valuations and reporting standards such as IFRS 9, IFRS 17, and U.S. GAAP
- Reduce reporting efforts by generating multiple financial valuations simultaneously
- Minimize time requirements for performing operational tasks while increasing the capacity for analytics
- Steer financial resource allocation
- Simplify compliance and reduce its associated costs
Starting the Transformation Journey
Financial transformation is a business imperative for insurers and SAP is uniquely positioned to help. SAP specializes in helping businesses run simply. Leveraging more than 45 years of experience in finance, SAP has developed the SAP S/4HANA for financial products subledger, specifically designed for the complex regulatory and reporting environment facing todays’ insurers. By taking advantage of the industry-leading in-memory computing platform, the SAP HANA business data platform, insurers gain the flexibility and speed they need to comply with evolving regulatory requirements.
For more information on how digital technologies are disrupting the insurance industry and creating new opportunities for financial transformation, download “A Comprehensive Subledger Solution for Finance Transformation.”
Volker Mohr is solution manager for the Industry Business Unit- Insurance at SAP.
Source: SAP ERP News