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Written by Li-May Chew, Associate Director, IDC Financial Insights. Li-May can be contacted at lmchew@idc.com


I have previously blogged on how operational pressures are nudging typically siloed risk and finance fractions at insurers to think more earnestly about creating shared priorities and enhancing partnerships to improve strategic decision making. This piece further expands upon those commentaries on Europe and U.S., but with a keener focus on the Latin American (LATAM) insurance market.


Our conversations indicate that the Brazilian and Mexican insurers are feeling the strongest pressures and keenest need for risk-finance collaborations vis-à-vis global peers. These regional insurers are getting their risk and finance teams to collaborate to reap benefits from shared business analytics and valuation engines that can enhance decision making for reporting, planning, and capital management. Furthermore, given that operating off common data sets would simplify operations and enhance control over data quality, accuracy, completeness and timeliness, they are also integrating risk with finance to reduce complexities and manage expenses.


When it comes to the extent of progress, insurers from Brazil and Mexico appear to have advanced the most with their integration programs given that 58% have consolidated risk with finance versus 48% globally (with almost a-third of these 58% in LATAM being satisfied with the extent of their implementation), another 32% being at advanced stages of planning, and 10% having at least started some sort of planning program.


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While there are undoubted benefits from interdepartmental integration, incorporating risk-based data into financial and performance management obviously engenders obstacles. The principal concern for LATAM insurers stems from a divergence in the way these two groups might define similar terms and measure divisional performance. Data would be defined and accessed differently due to the varying perspective between risk and finance, their information requirements, and tabulation methods. Ranking almost as critical is the lack of experienced personnel, and difference in perspectives and cultures between their finance and risk fractions - with both equally cautious of integrating for fear of ceding autonomy to the other.


Technological concerns also evoked great concerns amongst the LATAM respondents, with robustness of data being most crucial when it comes to providing the momentum for, or conversely stalling, integration projects. Another IT challenge centers round limitations from existing legacy technologies such as lack of scalability or interoperability of systems restricting risk-finance implementation.


To alleviate risk-finance coordination, insurers in LATAM see investments in enterprise business intelligence and analytics strategy nudging them towards deeper inter-departmental collaborations, alongside the sharing and joint development of common data warehouses and modeling competencies. Market leaders are also widening their competitive advantage by capitalizing on innovations such as enterprise information management to centralize data modeling and flow management, data visualization capabilities and unified data platforms.


As LATAM insurers continue to make inroads in consolidating their risk and finance divisions, they need to enhance this partnership by having a clear vision of what the joint responsibilities between both divisions are, while still preserving the independence of both. It would further serve them well to engage vendors with a comprehensive, yet integrated risk-finance data platform that can help establish shared data processes and management systems to reduce total cost of ownership.

Written by Li-May Chew, Associate Director, IDC Financial Insights. Li-May can be contacted at: lmchew@idc.com


Following my earlier commentaries on the partnership between the risk and finance fractions at European insurers, I want to now turn to the United States (U.S.) and highlight some survey data specific to this country in my next blog.


Discussions with the tier one and two insurers from the States indicated that they are likewise conscientiously trying to forge greater risk-finance collaborations. As a matter of fact, indicating that they are going beyond just paying lip-service but actually taking decisive actions, 47% in the U.S. have already consolidated risk with finance, albeit just a handful of these respondents professed to have completed satisfactory integration. Those that have done so are actively working on collaborative initiatives around capital project evaluations, mergers and acquisitions and globalization strategies, financing decisions and budgeting. Furthermore, it is heartening to note that another 40% is just one stage behind and ironing out their integration kinks, while an equally sizeable cohort have concrete plans to achieve consolidation in the coming months.


What is driving these collaborative efforts? Factors compelling them to do so include being able to enhance analytical expertise for improved financial forecasting, and getting access to more complete, real-time view and precise reporting of the insurers' businesses. Achieving cost savings from consolidation was also foremost on the minds of the American insurers, with interviewees ranking potential cost efficiencies as the foremost driver spurring collaborations. These organizations are obviously cognizant of the fact that expenses can be reduced from having data, reporting processes and supporting systems that are all common rather than siloed and disparate.

 

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And given that this chief risk officer-chief finance officer (CRO-CFO) partnership entails a degree of internal reworking, where is the funding coming from? We are encouraged to note that a very respectable 53% in the U.S. (against 36% of peers globally) have secured specific monies for these change-management endeavors, with only 20% needing to dip into their business-as-usual (BAU) funds. The remaining 27% however, have to put their case forth to senior management to secure additional discretionary funding.


As with all innovative programs, organizations are bound to encounter some barriers when it comes to implementing their risk-finance integration programs. Amongst all the operational and technological challenges, the American insurers noted that limitations from existing legacy technologies such as lack of scalability or interoperability of systems as the core factor restricting their risk-finance implementation. While this was given a score of 3.1 out of 5 globally, it was ranked as the top technological concern by the U.S. respondents at 3.7/5. Legacy modernization is therefore a critical imperative for these insurers to enhance business process and system capabilities and make way for greater risk-finance collaborations and business agility.


As these insurers busy themselves to integrate their risk and finance offices, we see them continually tweaking the extent of their risk-finance cohesiveness. While this is not an easy task, as integration efforts can derail from differences in objectives and priorities, benefits from more coordinated interactions would make it worth their while.


For those keen to read on developments specific to your region, do have a look at my previous blog on Europe, and an upcoming write up that will cover the Latin American market.

 

Please click here to download a copy of the IDC Financial Insights' White Paper: Risk-Finance Collaboration at Global Insurers: A Partnership in Transition.


Written by Li-May Chew, Associate Director, IDC Financial Insights. Li-May can be contacted at: lmchew@idc.com


This post expands upon my earlier discussions on IDC Financial Insights' global insurance study on interdepartmental coordination between risk and finance. I am touching on specifics for the European region, wherein we surveyed respondents specifically from the United Kingdom (U.K.), Spain, France and Germany.


Here, we note that findings closely echo global percentages -- respondents are largely cognizant of the benefits of enhanced integration but still figuring out the most optimal level of collaboration. Slightly less than half or 45% have started collaborations between risk with finance, although the majority of them admitted that they are still refining consolidation efforts. Amongst the four European nations, insurers in U.K. are progressing the slowest, with the comparable percentage being 36%. Moving down the spectrum, 34% of the European insurers we spoke with are at advanced stages of planning, which is a step behind collaboration. Furthermore, 14% have some preliminary structure, while just 7% have yet to consider such an alignment.


Our survey revealed that insurers from the European region are most influenced by benefits from greater analytical capabilities and information timeliness and quality. This makes sense, given the region's generally more stringent compliance landscape and the need to react more swiftly to evolving regulatory mandates.

 

What are the Operational and Technological Barriers to Improved Risk-Finance Collaborations?

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Meanwhile, though there is almost unanimity about the need for coordinated interactions, there remain numerous reasons why several have maintained status quo and have not changed their approach to managing risk and finance. Herein, we are pleased to announce that European insurers exhibited the most confidence globally when it comes to tackling operational and technological barriers to risk-finance integration. Even then, they are still contending with issues such as differences in perspectives and cultures between the finance and risk fractions, the lack of robust data systems, or limitations of legacy technologies which make it cumbersome to implement an integrated platform, as indicated in the above chart.


However, the medium term should witness a heightened understanding of the criticality of such transformational projects, with insurers allocating more funds to pursue stronger risk-finance partnerships. Market leaders both globally and in Europe are already widening their competitive advantage by investing in innovations such as unified data platforms, enterprise information management, and advanced analytics to bolster effective collaborations.


It is obvious that these integrational projects are comprehensive and oftentimes challenging internally. To break through these hurdles, insurers should consider collaborations with specialist vendors with a comprehensive, yet integrated risk-finance data platforms and advisory services.

Integrations between risk and finance continues to be fine-tuned at the European insurers. Stay tuned for my next blog on whether the U.S. market exhibits any different traits.


Please click here to download a copy of the IDC Financial Insights' White Paper: Risk-Finance Collaboration at Global Insurers: A Partnership in Transition.

Opportunities for
Insurers from the Internet of Things

 

 

By Mazahir Valikarimwala, Vice President, Insurance Business Unit, SAP APJ/MENA

 

    

In today’s highly competitive environment, insurers must maximize customer satisfaction while minimizing cost and risk. Increasingly, the
industry is exploring strategies to accomplish these goals using the Internet of Things.

 

  

These strategies are based on connecting various types of “smart objects” to the Internet through wireless devices – each of which has a unique IP address. This connection makes it possible to collect and analyze large volumes of data in real or nearly real time. By 2020, there will be 26 billion connected objects, according to estimates by Gartner, Inc. The use of such objects will change every part of the insurance value chain – from product design and pricing to underwriting, service, and claims -- say analysts at Celent and other business-consulting firms.

 

  

Through the Internet of Things, insurers can gather data on individual customer behavior and use that information to personalize premiums for health, homeowners, auto, and other policies. By sharing this data with customers, insurers may be able to change customer behavior, reduce risk, and
lower costs. They can also use the information to estimate risk and price their products more accurately.

  

 

Pay as You Drive

 

 

Take car insurance, for example. Traditionally, customers have paid premiums based on the kind of cars they buy and their past driving histories. But what if two customers with the same car and similar histories drive different distances at different frequencies? Should they pay the same premiums? And what if they’re significantly better or worse drivers now than when their policies were issued?

 

  

Questions about the cost of installing devices to monitor driving habits must still be resolved, as well as various privacy concerns. However, technology vendors and insurers are already discussing how they might market such devices (and potentially lower premiums) to younger drivers. A 2014 study
by Deloitte University Press found that 35% of consumers age 21 to 29 were open to the idea of monitoring their driving behavior in exchange for a discounted premium, versus 15% of drivers age 60 or older.

 

  

Other Opportunities in Usage-Based Insurance Similar opportunities for usage-based insurance (UBI) may be available for homeowner and health coverage using “pay-as-you-live” technologies that monitor home safety, the amount of exercise you get, or your glucose or cholesterol levels. Ptolemus Consulting Group estimates that there are currently more than 160 established UBI programs or active trials in 34 countries involving more than 5.5 million policies. By 2020, the firm predicts, UBI policies will account for 17% of market share in North America, 14% in Europe, and 4% in Asia.



Google-owned Nest Labs, a producer of smart thermostats and smoke detectors, is rumored to be working on a possible homeowners insurance
initiative using this technology.

  • The Mayo Clinic is currently doing research on using Apple’s iWatch and HealthKit software to collect and analyze data that would help consumers live more healthfully – data that could one day be used by insurers to price health care premiums.
  • SAP and one of the largest German health insurers are discussing a UBI initiative that would use in-memory computing and predictive analytics to help the company identify potential health issues for individual customers and suggest precautions customers could take.









Insurers' Top 3 Risk or Finance Pressures

 

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The current situation between Risk and Finance has been referred to by IDC as ‘a perfect storm which is brewing across the global insurance industry’. Their new global survey of insurance decision makers, sponsored by SAP, was conducted recently and is now available here. Executives from the risk management and financial disciplines were interviewed, including chief risk officers (CROs) and chief financial officers (CFOs) from 10 countries. The regional makeup involved leading insurers across Europe, Middle East and Africa (EMEA), North Americas (NA), Asia/Pacific (APAC) and Latin America (LATAM). More than half of the respondents represented mid-size to large insurers with annual gross written premiums in excess of US$500 million. So let’s look at some of these revelations.  

 

Firstly, what’s driving the tightening of Risk and Finance disciplines? The global financial crisis of 2008-09 created urgency for Risk managers to participate with executive management to help navigate the strategic course of their businesses. Since then, with a continually increasing complex risk environment, heads of risk have begun to regularly participate in senior management discussions. As for the Finance managers, they have also been elevated in importance. Their focus has shifted away from traditional transaction processing, financial reporting and tax compliance. Today, they have broadened roles which include implementations of robust financial performance management, along with the expectation to collaborate with the risk office to ensure insightful analytics and improved financial forecasting.

 

Regarding Risk and Finance operations, both roles need to work proactively together in response to regulatory developments such as the evolving legal and accounting rules as directed by IFRS4 and the EU Insurance Solvency legislation. They also need to keep up with the technological evolution, which includes: advanced analytical tools and processes to facilitate enterprise information management; quicker go-to-market responses to counter competitive pressures; centralization of data modeling; and the adoption of new enterprise resource planning (ERP) software. Their collaboration will help them better manage market unpredictability and costs, as well as improve strategic decision making. Lastly, integration of risk with financial decisions should include cooperative initiatives around capital project evaluations, mergers and acquisitions, and globalization strategies.    

 

In addition, the paper offers insights into the impact on organizational structure, operational and technology barriers, and how to break through those barriers. Enjoy the read and please share your feedback.



 
 

Dear Insurance Community,

 

that`s an amazing blog about SAP HANA Cloud Platform:

 

Understanding how Cloud and Mobility fit together by developing a simple mobile app (SAPUI5/iOS)

 

Please enjoy reading and think how to leverage best

 

Best regards

 

Boris

 

BORIS GREVEN

Cloud Business Strategy | Insurance GTM Lead | IBU Insurance

SAP SE | Dietmar-Hopp-Allee 16 | 69190 Walldorf Germany

Author: Li-May Chew, Associate Research Director, Financial Services Advisory, IDC Financial Insights Asia/Pacific


In my third instalment on the findings from an SAP-commissioned survey, I want to touch on the main barriers preventing more effective collaboration between the risk and finance offices, and conversely – a couple of innovations that could enhance integrations. Even as our survey with 75 insurers globally shows unanimously that respondents need little convincing of the benefits of collaboration, there lies a couple of reasons why some organizations have not found more momentum for such integration projects. Why is it difficult for these two inter-connected business units that have so many similarities - and much to gain - to deepen their relationship?


First, there are the technology hurdles. IT hurdles like limitations from legacy technologies which result in a lack of scalability or interoperability of systems, as well as a lack of robust data systems continue to make it cumbersome to implement an integrated platform. The challenge to moving to an integrated solution is also compounded by issues around fragmented data sources and lack of common language usage implying that there is no single data reference point to support integrated risk-finance reporting.

 

What Makes or Breaks Integrational Success?

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Despite these issues to surmount, it is also comforting to know that insurers are allocating more funds to pursue stronger risk-finance partnerships. Market leaders are already widening their competitive edge by investing in innovations. These investment areas include implementing enterprise information management to integrate data from a variety of sources in real time, and steps to centralize data modeling and flow management. Monies are being directed towards Big Data and advanced analytics to drive intelligent insights and risk-informed decisions on capital optimization. Unified data platforms with compatible data sets and centralized data modeling and flow management are also on the list. Having integrated platforms will help to create an enterprisewide source of truth for the multi-purpose data model, yet reduce internal departmental disputes and total cost of ownership.


It is clear from our conversations that while there has generally been commendable progress, today's risk-finance partnerships are in transition. There is still work to be done as most insurers attempt to find equilibrium between ensuring effective cross-departmental interdependence while maintaining an ideal degree of independence necessary to preserve both departments' decision-making.


Are you likewise deliberating over the degree of risk-finance cohesiveness that is appropriate for your organization? We do have some actionable pointers on that in our recently released White Paper, so do reach out to me at lmchew@idc.com if you would like a complimentary copy of that document.

On this beautiful October day in New York, SAP welcomed hundreds of customers and partners at the Ritz Carlton Battery Park to discuss Transformation and Innovation at the 3rd annual SAP Financial Services Forum.

 

While the topic of change and transformation has been discussed within Financial Services and Insurance for years, the main dialogue at today’s Forum centered around the urgency for firms to innovate and evolve their business models to capture customer mindshare. More than ever, the industry is facing incredible pressure from non-traditional competitors who are seizing the mindshare – and the wallet share – of customers around the globe.

 

Ross Wainwright, SAP’s Global Head of Financial Services, shared several examples of how banks are being disintermediated, and in some cases entirely excluded from customer opportunities by new entrants ranging from Lending Club, PayPal, T-Mobile and many more.

 

Stephen Dubner, best-selling author of Freakonomics, challenged bankers and insurers to think beyond their traditional business models and to re-define their framework for engaging with customers. While Stephen acknowledged that predicting the future is hard, if not impossible, he spoke about the importance for firms to question their current business models in order to remain relevant in their customers’ eyes.

 

Complementing the discussion around transformation was a thought-provoking perspective offered by Jennifer Morgan, SAP’s North America President. Jennifer offered an action plan for organizations to leverage innovations such as Business Networks and Data Science to drive technology and business process simplification in order to achieve the agility required to respond to changing customer demands.

 

The trifecta of simplicity, transformation and innovation was beautifully summed up by Willie Stegmann, CIO at Standard Bank of South Africa (SBSA), who travelled to NYC from Johannesburg to share his experience in driving an enterprise-wide transformation agenda at SBSA. Willie recounted the highlights and lowlights of SBSA’s transformation journey, sharing how SBSA created market differentiation and customer loyalty by harnessing innovation and delivering unique capabilities to their customers.

 

With over 50 speakers at this year’s event, the discussion of change and innovation continues. We hope you’ll join the conversation on Twitter at #sapfsforum. You may also want to bookmark the event page, where we’ll soon share the presentations and videos from this week.

Insurance Market is constantly evolving and companies are focussing on complete end-to-end IT solution. SAP provides complete solution to both primary and reinsurance companies with far wide scope of implementing all systems like claims, collections, disbursements, financial accounting, commissions and etc. integrated in one suite. The report focuses on Insurance Market, SAP Policy Management and integration aspects of Policy Management. Finally, the report discusses that FS-PM efficiently deals with today‘s insurance market challenges by its fully integrated, strong but highly flexible product and process platform.

 

1. Insurance Market

 

Insurance market has grown and adapted with and around the industry as it has progressed and it is still evolving. The companies are now looking more on complete solution which provides an end-to-end solution rather than relying on multiple vendors to manage products across modules so as to get more transparency on entire business process and to have better control on processes across horizons, which give insurers a perfect platform for making key business decisions that today’s challenging environment demands. SAP provides complete solution to both primary and reinsurance companies with far wide scope of implementing all systems like claims, collections, disbursements, financial accounting, commissions and etc. integrated in one suite.

 

2. Introduction to SAP Policy Management

 

Policy management is comprehensive policy management system from SAP. For primary insurers it remains the key Module so as to provide a better control over the Policy Administration of Insurance Policies with wide scope ranging from simple Life Insurance Products for Individuals to very complex group Insurance product for bigger companies.

 

SAP Policy Management system is capable of delivering in diverse Line of business areas which includes Life, P&C (Properties and Casualties), Automobile and Health Insurance and it also allows full customer-specific customizing and configuration in all Line of Business .

 

3. Overview of SAP Policy Management:

 

SAP Policy Management system being an integral part in any Insurance Product does the job of Policy Administration which includes Quotation Management, Underwriting, and Endorsements.

 

Policy Management system is tightly integrated with Product Engine (msg.PM/Camilion) and also integrated with other SAP systems like:

 

  1. Claim Management (FS-CM)
  2. Incentives and Commission Management(FS-ICM)
  3. Collections and Disbursement Management(FS-CD)
  4. Re-insurance(FS-RI)
  5. Business Partner(BP)
  6. Financial Accounting(FI)
  7. Organizational Management
  8. Business Intelligence

 

This provides better agility and more detailed understanding of the environment and what’s going on for both customer and the insurer and also one can get a 360 degree overview of all neighbouring system in SAP FS-PM itself per policy.

 

FS-PM is based on contract model architecture (Policy, Contract, and Coverage) and it takes care of the contract management. The contract management encompasses all Lob independent information and processes in service oriented components such as:

 

  • The business objects are managed efficiently and centrally (e.g. application, contract, change option ...)
  • Changes to objects are documented in the Journal( Two-Dimensional Versioning )
  • Correspondence is created to document results or to request information to customers
  • Insurable objects are managed centrally
  • Fund management is the basis for fund related products (example: Unit Linked Products)
  • Accounting component provides dialogs, business functions and background processing for subledger relevant and GL relevant transactions
  • Different business transactions are available to be executed both in background and foreground
  • Update and better controlling of all business functions with Time Model Functions

 

4. Integration Aspects of Policy Management

 

FS-PM sets benchmarks in Insurance because it allows an integration of all insurance components and acquires a complete and flexible product-driven in-force business management which also meets future requirements with cross-LoB approach.

 

1.4.1. Product Management

 

  • Through a combination with Product Manager (msg.PM/Camilion):
    • Quicker introduction of new products (“Time to market“)
    • High flexibility in the development of new products

 

Communication from the product manager (msg.PM) and in-force business management is clearly structured and packaged. Data exchange takes place in two directions:

 

  • Reference model describes the properties of contract management and is imported to the product manager. The SAP data categories are mapped to the msg.PM data categories, such as ACCP Integer, Char string (max. 255 chars)
  • Data is imported to msg.PM from contract management, to allow calculations to be performed there and to enable the reconciliation process with the reference model. The reference model cannot be edited in the product manager
  • Data is exported from the product manager to contract manager - static product data and calculation results. In contract management the system administrator uses extension services for enhancements

 

1.4.2. Integration to other Insurance systems from FS-PM:

 

  • Business Partner (FS-BP): Policy reads data from the business partner to get e.g. the valid address of the business partner. Business partner is used across FS-PM main axis hierarchy in form of policy holder, premium payer, insured person etc.
  • Financial Accounting (FI): Non-CF accounting documents are transmitted to FI for the creation of a balance sheet.
  • Collection and Disbursement (FS-CD): Cash-Flows are exported to FS-CD. These are documents or payments (collections/disbursements) that Policy expects to be paid physically by the customer or insurance company. FS-CD may itself aggregate its documents and send it to FI.
  • Correspondence: The customers need to be informed about the change which happened to their policies; FS-PM sets a trigger in the correspondence tool that information has to be sent. At the point when the correspondence takes place (internal SAP system or customer system) the correspondence tool calls back to FS-PM to get the data of the contract.
  • Claim Management (FS-CM): In most cases the claims management system needs data from the policy management in order to process a damage or loss which was claimed by the customer. An update of the policy may happen in case of a damage or loss Example: When the policy changes from a receiving retirement plan (the customer paid premiums all the time) to a paying retirement plan (the customer retired => expects that the insurance company pays him back the money with interest during his retirement time until death)
  • Re-insurance (FS-RI): The FS-PM provides a BADI with can use all contract information of FS-PM to allow accumulation which is used for Reinsurance.
  • Incentive and commission management (FS-ICM): Communication happens via the PFO (position assignment). Distribution plans have to be exported finally to FS-ICM to regulate the amounts that an agent or manager gets.

 

5. Key features in Policy Management System

 

FS-PM allows full customer-specific customization and configuration on the FS-PM basis module. It can map process chains in real-time and provides suitable sample content with cross-line of business basis processes. Standard templates and classes are available for different processes, products and insurance mathematics in line of business Life and P&C.

 

As FS-PM is built on framework driven architecture, it makes it more flexible and accessible from customer’s perspective. The framework that’s used in policy management is Policy based Technology (PBT) which is 4-layers architecture and makes it possible to create/change/delete entities, fields and screens across FS-PM system providing better controllability and extensibility.

 

Policy Management system also makes it really flexible for Product configuration and maintenance with In-force business Configurator (IFBC) available within the package.

 

Policy management provides a wide range of business processes to be executed within like:

 

  • New Business
  • Change Business
  • Inquiry
  • Reset
  • Reversal
  • Update

 

5.1. Components within Policy Management

 

FS-PM itself comprises of many components integrated within for better control and performance on policy products which also encompasses check and derivation rules, Business rule validations and important components like:

 

  • Accounting Component (Non-Cashflow)
  • Cashflow Component
  • Fund Management
  • Journals
  • Taxes
  • Object Administration

 

5.2. Policy Based Technology Framework

 

SAP Policy Management system is build upon the Policy Based technology (PBT) framework which enables a very swift and efficient development environment for FS-PM components and most of the solutions within FS-PM. The PBT framework has four layered client-server architecture completely based on SAP technology. It offers a workplace with own design environment, generator and template classes and has a flexible process control.

 

The Different Layers within PBT workplace are:

 

  • Channel Layer: Transfers the data which are entered by the user in subordinate layers
  • Process Layer: Handles business Activities and processes, helps to define UI, and Monitors the channel layer.
  • Business Object Layer: Maintains the entity relationship and groups them in a business object
  • Data Access Layer: Manages all entities of data dictionary tables and generates classes to access database table.

 

The data exchange between different layers takes place in both directions. Each layer within PBT workplace has its own layer manager and the layer managers are responsible for communication between Layers.

 

Application Programming Interface (API) in PBT:

 

It represents the developed application logic and is capable of replacing or completing different layers in PBT except Channel layer. Because of the exchangeability of the single layers within the architecture the API can replace each functionality (except the functionality of the channel layer) across PBT Layers.

 

5.3. Time Model and Business Transaction

 

Policy management system uses Time Models Functions (TMF) and Business Transactions scheduler (BTS) to perform various date related processing both scheduled and unscheduled. The dates can be date specific or period specific (Example: Premium Collection run can be scheduled to run monthly). In most of the update processing activities to keep the system up-to-date both TMF and BTX (along with BTS) are used within FS-PM.

 

Time model is a component which takes care of updating the insurance policies or contracts without the intervention of user. It consists of granular classes called time model functions which perform a well defined business tasks based on external trigger like scheduled or unscheduled changes.

 

The Business Transactions (BTX) executes any changes to policy/application in different business processes available within FS-PM with no or very limited user intervention. For each of the business and technical processes a business transaction is available Example: Change of premium Payer, Create Policy loan etc.

 

6. Summary

 

With these features of FS-PM which makes it integrate with other SAP Insurance modules and at same time has its own components for management of data including great extendibility and customizable framework and a independent product definition module tightly integrated making it a efficient policy processing solution which helps to reduce redundancies and errors and therefore improve revenue and competitive strength. Efficient handling of renewal and mid-term adjustments, automation of mass processes, and identification of relevant risks helps to reduce costs and improve transparency.

 

FS-PM deals with today‘s insurance market challenges by its fully integrated, strong but highly flexible product and process platform.The integrated yet modular SAP platform gives insurers the opportunity to pace implementation of new solution components and take an evolutionary approach to legacy replacement.

 

References:

 

FS-PM 5.2 sap help: http://help.sap.com/saphelp_pm52/helpdata/en/4c/48d6de47fc6f84e10000000a42189e/frameset.htm

 

Interesting Video from SAP on Insurance: SAP for Insurance in 7 minutes - YouTube

 

Author – Purajeet Panda from Serole Technologies

In-Force Business Configurator (IFBC) is used to administer and amend the information, in the form of templates that is relevant for policy management. Therefore, we can create, change, and delete the templates in the IFBC in FSPM. A template describes the runtime behavior of an object in in-force business.

 

Role of IFBC.jpg

 

 

Since the IFBC is a configurable part of the policy management system you can create and edit templates, it checks the consistency of these. When you configure a template, you enter data about interface control and the structure information that is required for managing data. If you classify certain characteristics as being relevant for the IFBC, you can control these using the IFBC, provided the associated entity has also been classified as relevant for the IFBC. The IFBC copies the Customizing settings for the field modifiers and for default values and permitted value ranges, and really does not influence any functions that are defined in business rules or business functions.

 

Policy templates are the central control of the In-Force Business Configuration are part of the individual Customizing, and control the behavior of the objects (sales product, product, premium and so on) during operation runtime.

 

A template determines how an object is to behave at runtime in the policy management system. You can create templates for the objects you have marked as IFBC-relevant in the PBT (Policy Based Technology) .

 

Policy templates contain information, such as product assignment; behavior of the characteristics of the entities like field modification, default values, value ranges; and instances of the entities that influence in-force business attributes.

 

To simplify the creation of new templates in a SAP system, you can use copy function available.

 

These are the three types of copying policy templates:

1) Copying of the template with references to the dependent subtemplates.

2) Copying of the template with all main axis subtemplates.

3) Copying of all templates and all of subtemplates to new templates.

 

These templates simplify day-to-day business. You can define default values for all the fields classified as relevant for the IFBC. Therefore, IFBC can configure the policy business object for the policy management system and create templates containing the product knowledge relevant for in-force business. The IFBC also manages data that can be defined in a product engine, such as Product Engine (msg.PM). The IFBC, therefore, contains functions for copying static product data from a product engine to the IFBC templates.

 

The In-Force Business Configurator is used in two different places; the FS-PM and the product engine.

In FS-PM, it ;

1) Supports the policy instance;

2) Based upon templates

3) Manages business objects and attributes in concrete policy context

4) Supports product installation

5) Sets default of attributes, values, or range of selections

6) Defines Obligatory, Optional, Edit, and Hide options of fields

7) And defines cardinalities.

 

These are the component that FS-PM gets from the product management:

1) Product structure, which contains classes and objects regarding the main axis, lateral objects, and internal objects.

2) Relevant attributes, which includes all relevant attributes that are actually established from the reference model.

3) Premium calculation, which is a method that is called on the highest level and which triggers methods for calculation on the lower levels

4) Tariff, which is a standard property-liability insurance premium set by a rating bureau for a particular class of risk.

5) Profit, which is calculated based on used premium calculations and tariffs

6) Discount or Charges, which is defined by a customer and is dependent on a product structure.

7) Rules, which defines the structure of some sales products.

 

All of these are imported in a compilate which then should be imported within the IFBC.

Dear Insurance Community,

 

today I am very glad to announce that our Insurance Community has been refreshed. This will allow you to better question, discuss and share content just doing your business - Insurance business. In general, we are having some rules how the communities have to look like so I did my best to be conform bringing more value to you. 

 

... just enjoy and blog

 

Best regards

 

Boris

 

BORIS GREVEN

Cloud Business Strategy | Insurance GTM Lead | IBU Insurance

SAP SE | Dietmar-Hopp-Allee 16 | 69190 Walldorf Germany

Dear Insurance Community,

 

here you will find two amazing blogs about the SAP HANA Cloud Platform:

 

SAP HANA Cloud Platform - Setting the Stage (Part 1)

SAP HANA Cloud Platform - Setting the Stage (Part 2)

 

...just try it

 

 

HCP offers a set of higher-level services, which provide specialized capabilities as needed for specific scenarios such as:

 

 

ENJOY & HAVE FUN

 

Best regards

 

Boris

 

 

BORIS GREVEN

Cloud Business Strategy | Insurance GTM Lead | IBU Insurance

SAP SE | Dietmar-Hopp-Allee 16 | 69190 Walldorf Germany

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A new global survey of insurance executives sponsored by SAP was conducted by The Economist Intelligence Unit (EIU) in June 2014 and the study is now available here. 338 executives from various property/casualty and life companies were questioned about the future of insurance, and the results are providing fascinating insights. The respondents held senior positions, with 86% holding titles of vice-president or director level, or higher. Also the revenue levels of the responding companies were very impressive, with almost half (45%) collecting over US$1bn in premiums each year, and about one in five having annual premium income over US$10bn. Lastly, the regional makeup included: 36% in North America, 26% in Western Europe, 28% from the Asia-Pacific region, and the rest (10%) from the Middle East, Eastern Europe, Latin America and Africa. So let’s review some of the findings.      

 

Firstly, are insurers expecting change? You bet they are, with a majority (60%) of The Economist Intelligence Unit’s survey responding that they expect significant to massive change in the industry. However, an alarming discovery was that less than half (46%) believe their companies are “well prepared” for change. And where do they expect this change to occur? A plurality (42%) of respondents says the front office—the part of the organization closest to customers—is the most vulnerable to disruption. Furthermore, the highest level of agreement among the participants found that ‘companies that fail to simplify, streamline and improve the buyer’s experience will not survive’. The warning has clearly been issued and should be heeded.

                                                      

Regarding Insurance solutions, insurers have tended to build their own systems, but that is changing now. They are reassessing their core competency and dedicating their technological resources to strategic differentiation rather than commodity capabilities. Insurers are also turning to cloud computing solutions for the same reason as any other enterprise—rapid deployment and lower start-up costs, according to Matthew Josefowicz, of Novarica. Investments in online capabilities have become among the most important ways insurers attract independent agents and other distributors through “ease of doing business”. The respondents also believe Big data and Analytics can help them get a better handle on risk and return, pricing, portfolio risk management, product design and underwriting decisions.

 

In addition, the paper offers insights into competitive threats, underwriting changes, new types of distribution arrangements, innovative ways of interacting with customers, and more. Please share your feedback.

Although the last financial crisis made transparency a “must” for financial service providers, the reinsurance industry has long found transparency to be a precious asset. 

 

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Transparency helps reinsurers comply with government regulations, such as determining an adequate capital basis for financial strength. With the right data and insights, reinsurers can also better inform rating agencies, manage risk more effectively, and make better decisions about new business opportunities. The ability to gather, review, interpret, and analyze data is thus a critical success factor for reinsurers. It has become increasingly important in risk allocation networks – where reinsurers must decide how much risk to assume themselves and how much they should cede to network peers or the capital markets.

 

To acquire the information they need and use it effectively, reinsurers must efficiently manage the huge (Big Data) volumes of information at their fingertips for analysis and reporting. They can then use this information to create real-time insights that help executive managers, underwriters, asset managers, and other stakeholders make appropriate business decisions.

 

 

Big Data in action

 

 

For many years, as an example, reinsurers have modeled scenarios for natural catastrophes to determine the potential impact of hurricanes and other disasters on their risk portfolio. These models are fed huge amounts of data from different source systems – from underwriting experiences and loss metrics to actual histories of the catastrophes. The greater the amount of qualitative data that reinsurers can process about natural events and portfolio risk, the more successful they will be in making decisions about risk retention and distribution related to those events.

 

Similarly, reinsurers that can effectively analyze the behavior of long-tail claims can optimize their reserving processes and better secure the financial strength of their companies. Accurate, real-time measurement of company performance helps reinsurers take timely corrective measures, such as reducing retention limits or changing investments for greater capital availability.

 

 

 

New information technologies

 

 

More than half (53%) of reinsurers and other companies polled by SAP Performance Benchmarking report a gap between their access to Big Data and their analytics capabilities. As demand for transparency and effective management of Big Data increases, however, new technologies are emerging to help reinsurers gather and manage their information to gain real-time business insight.

 

Using solutions such as the SAP ERP and SAP Business Planning and Consolidation applications that leverage the SAP HANA platform for established analytics and data modeling, companies have increased insights into Big Data by 40%, according to SAP Performance Benchmarking. Tools like SAP Business Process Management software help reinsurers connect their risk evaluation, retention, and pricing process with processes for underwriting, claims, risk, and asset management. Such tools support the interchange of qualitative information among various stakeholders for optimized decision-making in the allocation of risk. 

 

Technology such as the SAP HANA can help reinsurers gather and process information for real-time insight. In addition to modeling natural catastrophes, reinsurers can properly invest their assets and make strategic decisions about entering new markets and lines of business.

 

With this kind of support, reinsurers can transform the management of Big Data from an overwhelming challenge into a valuable asset for risk management that can significantly enhance their performance.

 

 

 

To learn more about how we can help you with your business challenges please have a look at SAP's Solution Explorer for the Insurance Industry: https://rapid.sap.com/se/#vm?indids=i_insurnce&lobids=all

 

What do you think about transparency at the insurance and reinsurance industry?

 

Continue the conversation in the comments below and on Twitter @SAPforInsurance.

The blog primarily discussed the Basic idea about reinsurance. Further, it highlights the risks associated with reinsurance and mitigation of risk. Reinsurance is a module included in SAP insurance business process. Additionally, it focuses on the complete solution of SAP FS-RI including Basic system, Prognosis and estimation and Loss. Finally, it recommends reinsurers who do not have SAP FS-RI, to adopt and automate their business and enjoy more profits.


Check out the full blog post at http://scn.sap.com/blogs/apoorv/2014/09/15/fs-ri-the-future-of-reinsurance

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