Business growth remains top priority for insurance CFOs despite pandemic – EY | News

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The pandemic has made business planning ’more important than ever before’ for insurance CFOs

Business growth was named as a top priority for insurance chief financial officers (CFOs) over the next twelve months despite the Covid-19 pandemic.

This was the case for eight out of 15 insurance CFOs from major UK insurers, meanwhile five chief financial officers see it as their main focus over the next three months.

This is according to a research report from EY Financial Services – EY Insurance CFO Survey: Minds made for Transforming Financial Services.

Yolaine Kermarrec, UK insurance partner at EY, said: “For much of this year, as expected, insurance leaders have been concentrating on mitigating against the impact of Covid-19, but perhaps surprisingly the majority remain focused on business growth.

“However, the pandemic has changed industry thinking on a number of fronts and has forced firms to think differently about their strategies; some moving into new sales channels, others looking at different product lines to increase market share.”

Responding tactically

Business planning was another top priority, and more important than ever before due to the pandemic, with 11 CFOs ranking this in their top three.

Kermarrec said: “There’s been an acceleration of technology-led transformation as insurers have refocused on agile, virtual processes as a means of responding tactically to the challenges brought by Covid-19.”

But cost reduction also remains high on the agenda, and it will continue to be a key focus over the next twelve months she said. With expense ratios under increasing pressure as claims have risen during Covid-19, CFOs will be keen to ensure cost reduction programmes deliver on time and within budget.

Critical solvency position

Insurers’ risk profiles have changed due to the pandemic, and the protection of the capital position is more critical. More than 60% of respondents updating their Solvency Capital Requirement (SCR) in H1 2020, and 86% of CFOs monitoring this.

She concluded that CFOs are taking measures to maintain strong solvency ratios within the target zone and are monitoring this more frequently than pre Covid-19. This is driven by both “management demand and increased regulatory reporting requirements”.