Insurance finance departments treading water: report

Insurance company finance departments are under pressure to adapt to an increasing number of regulatory changes while at the same time they are morphing from the role of number-cruncher to one of strategic contributor, according to a recent report by KPMG.
In its report, Insurance Insights 2007, KPMG Internationals research suggests that 50% of an insurance companys finance department time remains focused more or less exclusively on transaction processing.
Many institutions are still struggling to get their core activities largely automated to free up time and resources required to evolve into a true strategic role, the report says. In fact, the amount of time spent on manual adjustments, reconciliations and management by spreadsheet (and related risk of control failures) has increased with every new regulatory requirement.
The KPMG survey cites a 2003 IBM survey, in which chief financial officers said their top priority was to achieve the changes necessary to improve contribution to business growth, including better decision support, performance management, forecasting and risk management.
The 2006 [IBM] survey shows the same set of priorities, the KPMG report notes, citing United Kingdom examples. Little progress has been made. It is hard to escape the conclusion that compliance initiatives [IFRS, Basel II, Solvency II] have been taking priority and hindering the desired change towards adding value.
The KPMG report recommends that finance departments take the time to develop a target operating model for finance.
First, the model would identify key objectives for finance departments in six areas services, organization, people, process, technology and location. Second, the model would outline a clear path of activities that must happen in order for the finance department as it stands now to evolve towards its future goals.
The report is available here