Articles and Insights



 


kano

The Kano Model - how to delight your customer

7th July 2017

The Kano model was developed in the 80s by Professor Noriaki Kano. It is based on the concept of customer quality and provides a simple ranking scheme which distinguishes between essential and differentiating attributes. It is a technique that helps businesses understand varying levels of value that customers place on different features of its product and services.
The Kano model helps factualise what the client really expects, and maps current performance level.
kano 

We map how customer needs are fulfilled based on eight dimensions:
• Product / service
• Quality
• Delivery precision
• Special request handling
• Price
• Service – availability
• Service – knowledge
• Service – professionalism

That way we can define:
• the different categories of clients we are servicing
• our current service level towards the customers in each category
This is how we secure a particular level of performance within our team and we strive to think what delighters could be introduced to the client.

Customer Requirements (or potential needs) for new products and services are categorized and plotted on the Kano graph as follows:
Dissatisfiers
These needs are considered to be basic requirements that the customer most often doesn't articulate when making an inquiry about a certain service, but will be dissatisfied if they are not met. They can be thought of as the basic needs the customer is looking to meet when engaging with us in the first place.

Example of dissatisfiers in a typical project: engaging fewer experts in the project than agreed, which results in a longer time to deliver.

Satisfiers
These needs are asked for and are thought of as important to the customer. Hence, they are the expectations that the customer has above the basic needs. Be sure to uncover why the customer wants a certain feature or specification. The more specific their request, the more important this becomes. They can be mapped by conducting customer surveys.

By definition, for those clients where a written contractual obligation is agreed, ‘satisfiers’ are what is expected.

Example of satisfiers in a typical project: delivering according to the timeline and the outcome that was signed in the agreement.

Delighters
These are existing needs that the customer has not defined themselves. They exceed what is expected and if you meet these needs you get faithful customer and competitive advantages. Providing this kind of quality requires the supplier to have an almost overwhelming sense of what it is to be a customer.

Example of delighters in a typical project: providing additional consulting services above what was agreed.

 

Food for thoughts: when the delighters become the new satisfiers.
In the 1980s it was typical for UK banks to offer a free gift for customers opening a new account with the provider: a money box for child’s account, a pen for an adult one. As this became the norm, banks had to look for other incentives or enticements to command market share. The 1990s saw them give away calculators, books and begin to offer telephone banking. Again, expectations shifted and we now have previous delighters, like £100 cash in your account, internet banking and extended Saturday hours being expected – so what will the next delighter be and how will suppliers keep up?


 

Lessons Learnt

Actuarial Transformation Projects - How to Succeed?

Andries Beukes (Director, Actuarial Solutions)

28th June 2017

Practical lessons for successful actuarial transformation projects

Education on Lean principles and process improvement tends to rely on case studies from industries far removed from what actuaries can relate to. Sure, it’s impressive that changing the flow of an assembly line increased production in a factory, but how do we translate these kinds of examples into something a valuation actuary can apply?

In the final instalment of my transformation failures series, I’m going to spare you the analogies and boil down years of involvement in a variety of transformation projects into some practical lessons my team and I have learnt from those that worked well.

Create incentives for buy-in

Leaders need to accept that introducing a transformation project will affect their teams’ KPIs. Employees have little incentive to complete tasks which do not directly contribute to their performance reviews. Including transformation-related objectives in performance discussions and hiring external resources to ensure that Business As Usual (BAU) work doesn’t fall behind is one way of obtaining employee buy-in.

You can’t measure what you don’t manage

Benchmarking actuarial processes may not be as obvious as counting the number of widgets produced per hour, but it has to be done somehow in order to measure the outcome of any project.

As highly-skilled professionals, actuaries enjoy a level of trust which has traditionally exempted them from having to complete detailed time sheets and record performance metrics. And if uprooting this tradition is not the answer, it may be worth investigating software solutions which can assist in performing such measurements automatically.

Outsource where it matters

Typically in transformation projects, contractors are brought in to help with the project work, leaving permanent employees to fulfil their BAU tasks. This approach results in contractors who are enthusiastic and knowledgeable about the new process and permanent staff, for whom the process was designed, with little know-how of, and even less interest in, sustaining it.

Middle management might look at using contractors to assist with BAU work. Even if doing so releases enough capacity for just one person in their team to focus on transformation, it goes a long way to guarantee internal buy-in and retention of expertise after the contractors have left.

Optimise your existing tools

We know that the arsenal of an actuary confronted with a new problem comprises first principles and a blank Excel spreadsheet. As time passes and complexity increases, these become cumbersome and sluggish solutions. In these situations, a transformation project does not have to be a huge end-to-end overhaul. Start small, look at the tools and software that you have.

Too often, teams will embark on significant projects or buy expensive technology when the systems they already had in place could have done the job just fine. They should rather invest in thorough training on what they already have; it often comes as a surprise just how much the application they’ve been using for years can actually do.
 

Throughout this series, I have shared my thoughts, based on years of experience at all points of the “project spectrum”, on why transformation projects are so often doomed to failure in actuarial teams. If nothing else, I hope that it has generated some ideas and discussion at this critical time. To gain the most value from IFRS 17, we need to start adapting our systems and processes now to make sure they are sound and running efficiently by 2021. And we’ll need some well thought-out transformation projects, backed by strong leadership and plenty of buy-in, to get there.

If you would like to discuss any of the ideas shared in this series, or find out how MBE can assist with your upcoming actuarial transformation projects from start to finish, please contact me. I am backed by a highly-skilled and experienced team of actuaries, IT specialists and process consultants, who are passionate about adding value to our clients’ businesses.

Read the full series on Transformation in Actuarial Teams on our website, starting with The Need For Transformation in Actuarial Teams.


 

Actuaries Versus Technology

Actuaries Versus Technology

Andries Beukes (Director, Actuarial Solutions)

22nd June 2017

Why do transformation projects fail…and what can actuaries do to make them succeed?

Corporate transformation projects are notoriously likely to fail (a fact to which many studies attest), but are there factors present in actuarial teams specifically, that can make or break actuarial transformation projects? In my previous post I looked at the importance of investing in IT relationships and infrastructure. Sticking with that theme in this week’s post, I take a step back to explore why actuaries are sometimes reluctant to embrace new technology – even if it promises to help them to be better at their jobs.

Using technology to drive progress in actuarial teams

Many professions seem to revel in the introduction of new technology to their professions. They realise that every time a tool is enhanced, it enables them to be better at their jobs – whether it be in the operating theatre, on a construction site or in a tech sandbox. Why is the financial sector so different? Over many years of being involved in transformation projects, I have observed that actuaries, specifically actuaries in back office and client service teams, are often reluctant to embrace new tools and techniques, preferring instead to stick to the old systems they know and trust – however inefficient and unsustainable they might be. Why is this the case?

Risk aversion is drilled into actuaries from the start of their education. The stereotypical actuary is risk averse by nature, and thus drawn to a profession which methodically provides for all contingencies. Strict regulation governing the insurance industry – and the responsibility of protecting policyholders’ assets – ensures that actuaries do not take any unnecessary risks in the workplace either. This extends to the use of the technology they use to do their jobs. Transformation projects may involve the introduction of new systems which promise to streamline computing requirements and automate manual processes. They may also propose the development of bespoke solutions to best meet a company’s specific needs (as is commonplace in the banking industry). Such claims and ideas are often met with mistrust, and actuarial teams are unwilling to invest in these solutions. Technology is expensive and in these cases the perceived benefits do not warrant the cost involved. Sometimes it only takes one success story to have a cascading effect throughout the industry, but nobody wants to be the first to take the plunge.

In defence of actuaries though, they may be unwilling to spend the money simply because they don’t have it. Those who hold the purse strings, senior management, tend to see the actuarial back office purely as a reporting function, not really adding much value to the business. They may therefore be less willing to invest budget into these teams, due to the low perceived returns. This makes it difficult for the affected actuaries to add value, as their systems do not allow them to do so, and they find themselves in a Catch-22 situation: unable to add value because of clunky systems, and unable to invest in new systems because they aren’t perceived to be adding value.

Whoever the decision-makers may be, the fact is that at some point, it becomes risky not to invest in new technology. A lot of older software is not designed to cope with the volumes and complexities of today’s insurance business, and processes characterised by manual adjustments and physical handovers are disasters just waiting to happen. Fear of being made redundant by computers may partly explain this desire to hold onto the past, but, as the profile of the ‘typical actuary’ evolves, a new, forward-thinking generation of actuaries can use technology to propel the profession to greater heights, instead of diminishing it to what amounts to little more than human debuggers.

At MBE we are passionate about harnessing the power of technology to add value to our clients’ businesses. We offer bespoke or off the shelf solutions, depending on each client’s need. We also believe in helping clients make the most of the tools they already have. To discuss how MBE can optimise your IT infrastructure, please contact me, or our Director of IT Solutions, Christo Muller.

Watch out for the next piece in our series of transformation articles focusing on Practical Lessons for Successful Projects.


 

Actuaries and IT

Mending the Relationship Between Actuaries and IT

Andries Beukes (Director, Actuarial Solutions)

14th June 2017

Why do transformation projects fail…and what can actuaries do to make them succeed?

Corporate transformation projects are notoriously likely to fail (a fact to which many studies attest), but are there factors present in actuarial teams specifically, that can make or break actuarial transformation projects? In my previous post I looked at the challenges of obtaining buy-in from actuarial teams, specifically ahead of IFRS 17 implementation. But even if the teams are on board, there are other relationships that need to be managed to ensure successful transformation projects. In this week’s post, I talk about the complicated relationship between actuaries and a stakeholder that acts as the gatekeeper to any technological development: the IT team.

It's complicated: mending the relationship between actuaries and IT for successful transformation

Qualifying as an actuary requires running a gauntlet of some of the toughest exams in the world. The education system covers everything from commutation functions to communication faux pas, but fails to prepare students for practical life office work in a crucial way: there is a glaring neglect of IT training.

Any actuarial student starting work will be thrown into the world of coding, runs, databases and shared drive disk space. But it’s accepted that the IT knowledge required to operate often complex and resource-intensive models is something that can be picked up “on the job”. And the distant, often strained, relationship between actuarial and IT departments leads to actuaries working relatively autonomously with limited IT support; bolting on tactical solutions – which may not be the most efficient or sustainable approach – as they see fit.

This might have worked in the past, when regulatory and reporting requirements in the industry were more stable and simpler and did not require as much specialised software, data management and reporting capabilities or computing power. The last decade, however, has seen a surge of complex products and new reporting standards and regulatory requirements. The attitude of actuaries towards formal project management, i.e. seeing transformation projects as administrative burdens and obstacles to timely completion of their projects, which was formed years ago, still prevails today. Actuaries feel that they can solve problems faster and more efficiently without IT support. But years of bad habits and lack of investment in actuarial IT infrastructure and relationships have resulted in a build-up of teetering solutions that are difficult to support and prone to deficiencies and errors.

It seems that actuarial transformation projects, of which the upgrade of IT systems and relationships is almost always a large part, is likely to fail until more investment is made into the relationship between actuaries and IT, or until actuaries formally become IT specialists themselves.

If you have ideas about, or experience in IT relationship management, or would like to talk about systems and IT options for an upcoming transformation project, please get in touch with me at andriesb@mbe-intl.com, or visit our website at www.mbe-intl.com. We have a team of highly-skilled actuaries and IT specialists who understand transformation and the challenges faced by actuarial teams.

Watch out for the next piece in our series of transformation articles focusing on Actuaries and their Interaction with Technology.


 

Buy-In

IFRS 17 - Actuarial Buy-In for Sustainable Change

Andries Beukes (Director, Actuarial Solutions)

6th June 2017

Why do transformation projects fail…and what can actuaries do to make them succeed?

Corporate transformation projects are notoriously likely to fail (a fact to which many studies attest), but are there factors present in actuarial teams specifically that can make or break actuarial transformation projects?  In my previous post I looked at the necessity of strong actuarial leadership to the success of transformation projects.  Once the leaders are on board, what can they do to get buy-in from their teams?  Read my thoughts on that elusive element of project management below.

IFRS 17 requires buy-in to be a catalyst for sustainable change

Leadership in actuarial transformation projects is crucial to their success, but why do these projects struggle to get the buy-in from leaders and team members alike?  As we prepare for IFRS 17, how do we obtain the actuarial buy-in required to make any transformation project a success?

One reason is that actuaries are trained to be autonomous problem-solvers.  Non-standard policy to be valued?  We’ll just whip up a manual adjustment in a spreadsheet.  New regulation coming in?  Let’s squeeze the margins built into our monthly process to make sure we report on time.  IT taking too long to upgrade the liability model?  We’ll just learn to code the new product ourselves and bolt it onto what we have.  This can-do attitude – and the trust placed in actuarial teams – may mean that they are not always aware of the inefficiencies and risks present in their processes and hence don’t see the reason for transformation.  In these cases, is it necessary and effective to manufacture a crisis to obtain buy-in?  In other words, perhaps we need to induce a feeling of panic for actuaries to admit that they cannot do it all and hence become receptive to change.

Lack of buy-in may also be explained by the need of actuaries to see a clear transition plan, including the projected long term benefits, in a measurable, tangible format.  Actuarial resources are almost always under pressure, rushing from one deadline to the next.  If they are going to sacrifice precious time (of their own and of their teams) to make these changes, they need to have, from the early stages of a project, a very good idea of what they are working towards.  But articulating a solid outcome is not always easy to do. 

Actuaries know better than anyone that it is difficult to make predictions based on limited data.  For a start, we need to know basic metrics of our current state to measure the success of any transformation project.  But, in my experience, very few companies measure the simple KPIs that could be used to baseline the efficiency of operations.  How many runs failed during the previous production? What are the reasons for the failure? How many hours does each step of the process take?  Can we even list the various steps in our process?  How many different sources do we use for the same data?  If we don’t know where we are starting from, visualising a better state becomes challenging.  Many actuaries sweep their inefficient processes under the carpet of “expert judgement”.  But teams need to start formalising their processes – however inefficient they may be – to give themselves the chance to see the potential benefits of change.

Another obstacle to buy-in from actuaries is the ever-present desire to reconcile to the nearest penny. Current modelled numbers are taken as gospel and any deviation, no matter how efficient the new systems or processes are, will be met with suspicion.  This mistrust comes from a good place – the desire for accuracy – but loyalty to what’s known and comfortable may impede teams from seeing the flaws of their current models and processes.  To paraphrase George Box, one of the things we know for sure is that all models are wrong. Some of them, however, may still be useful.  This happens when timely and transparent data becomes easily accessible to the wider organisation.

Strong leadership, coupled with buy-in from the teams, will result in change being embraced as business as usual long after the process consultants have left the building.

Whenever changes are made, they are always easier to digest in small steps.  Read the thoughts of Vibeke Fennell, Director of Operational Excellence at MBE, on this topic in the Raconteur Business Transformation Report.  Or to talk to me about buy-in in transformation projects, contact me via e-mail or the MBE website.

Watch out for the next piece in our series of transformation articles focusing on The Relationship Between Actuaries and IT.


 

Power of Leadership

The Power of Actuarial Leadership

Andries Beukes (Director, Actuarial Solutions)

30th May 2017

Why do transformation projects fail…and what can actuaries do to make them succeed?

Corporate transformation projects are notoriously likely to fail (a fact to which many studies attest), but are there factors present in actuarial teams specifically that can make or break actuarial transformation projects?  In my previous post I looked at why, especially in light of IFRS 17 requirements, we need transformation projects in actuarial teams, and shouldn’t give up on them.  The articles to be released over the next few weeks will examine a few commonly identified reasons for the failure of these projects and what we can do to address these issues.


Perhaps due to their historically privileged position at insurance companies, actuaries tend to respond best to other actuaries.  They will not trust data unless it has been checked by actuaries, they will not relinquish control of their models to non-actuaries and they most certainly will not buy into a significant change initiative unless it is being championed by an actuary in a leadership position.

In many cases, actuaries in leadership positions do not take enough ownership of transformation projects.  Even if they have had a hand in approving and providing budget for a project, I’ve seen time and again that actuarial leaders will step back once the project has commenced and expect the process consultants or project managers to make it a success.  This will not work because, even at entry level, actuarial team members are inducted into a culture which, justifiably or not, respects actuarial authority to the exclusion of others.

Actuaries in leadership positions need to be visionary and proactive in order to inspire those who respect them.  This kind of contagious enthusiasm can only be evoked when leaders themselves drive the project and make it their own.  Grudgingly cooperating with nagging consultants is not enough.  To achieve sustainable improvements and buy-in from everyone involved, actuarial leaders need to visibly, passionately and genuinely believe in transformation projects – and create the time and space for their teams to do the same.

If you are an actuarial leader interested in the benefits of transformation projects, please get in touch with me at andriesb@mbe-intl.com.  We have a team of highly-skilled actuaries who have specialised in transformation and understand the challenges faced by actuarial teams.

Watch out for the next piece in our series of transformation articles focusing on Leadership buy-in.


 

Transformation

The Need For Transformation In Actuarial Teams

Andries Beukes (Director, Actuarial Solutions)

23rd May 2017

It’s been an eventful week for the actuarial community – the finalised IFRS 17 Insurance Contracts regulations came out on Thursday, and Friday marked the first Solvency II deadline observed by the majority of UK insurers.

Consensus seems to be that the Solvency II deadline presented some challenges.  There are things we could have done differently, processes that need some refinement for next time.  But now we need to look ahead to the next challenge.

IFRS 17 presents a new opportunity for transformation; a chance to save ourselves a lot of problems in 2021 and beyond.  But before we launch ourselves into a new batch of large scale process improvement projects, I thought it would be good to explore some reasons transformation projects often fail in actuarial teams – and what we can do to give them the best chance of succeeding...


From the day the first life table sprang into existence, actuaries and insurance companies have been inseparable.  The insurance industry has developed the actuarial profession as much as the profession has developed the industry and, for much of their shared history, it was impossible to imagine the one without the other.

Over the last ten years, however, cracks have appeared in this previously solid union.  In the past, actuaries not only developed the technical backbone of the insurance industry, they also provided strategic insights at management and board levels.  Recently, however, actuaries have taken on a more compliance-focused role, diminishing their visibility at and value to higher levels of the organisation.

The new generation of actuaries has spent so much time turning handles and churning numbers, that it is not equipped to contribute to strategic and commercial goals of insurance companies.  This is not optimal for the companies – which are paying expensive resources to do work that they are over- (or, in my opinion, often under-) qualified for – nor for the actuaries themselves, who are not given a chance to develop their hard-earned skills nor reach their full potential.

This phenomenon alone gives rise to the need for transformation projects in actuarial teams, but there is another relationship at play, the stunted development of which has resulted in untold frustration and inefficiency: actuaries and IT.

The world of actuarial and data technology, the present state of which is the result of years of significant underinvestment, is one of the few clunky relics still resisting the global technology boom of the current age.  Also, actuaries are extremely resourceful in building their own ad hoc solutions where technology fails them.  It is unclear whether there is a causal relationship between these two factors and, if so, which came first.  But the combination has resulted, I believe, in a generation of under-utilised, over-protective actuaries who are too busy guarding their inefficient models and unwieldy data to gain the experience required to meet the strategic needs of organisations.

Transformation is needed, both at the level of individual companies, but also in the actuarial culture.  Yet we see, time and again, a reluctance from actuarial teams towards transformation projects.  And, given the high rate of ultimate failure of these projects, perhaps this reluctance is justified.  But that doesn’t mean we should give up on the idea.  In fact, we should strive to understand why these projects go wrong and how we can change our approach to ensure that they free up actuarial resources in a way which allows them to add strategic value as only actuaries can.

In the coming weeks, I will be releasing a series of concise articles exploring thoughts on why transformation projects fail in actuarial teams.  I hope that these articles will be thought-provoking and even inspire future transformation projects that use the lessons learnt from past failures.  Let’s equip actuaries to fully utilise their unique skillsets and help them transform themselves into business partners and leaders who communicate strategy and insight to their stakeholders by using efficient models, data processes and technology.

My next piece will look at the power of actuarial leadership – a make or break factor in actuarial transformation projects.  If you have any thoughts on this topic, please e-mail me at andriesb@mbe-intl.com.


growth

Go small or go home: avoiding business transformation failure

22nd March 2017
Business transformation programmes have a habit of failing at great cost to the company, but transformations are changing - and it's time organisations approached them in a different way...read MBE's ideas on a step-by-step approach to business transformation in Raconteur's Business Transformation report here.


relationships

Transactional Analysis in the workplace

10th February 2017
MBE recently hosted a workshop on the principles of Transactional Analysis and how it can be applied to optimise relationships in the workplace.  Here are some of the things we learned.... 


target

Do you have a CRISIS in Data Governance?

18th January 2017
At the last Data for ERM & Solvency II conference hosted by Insurance ERM, MBE partner Vibeke Edvardsen chaired a forum on “Ensuring that your data governance framework is sufficiently agile to cope with the changing rregulatory landscape”.  As the debate unfolded, it became apparent that the real cause for concern was not the tools and frameworks, but the data itself, leading to some critical questioning of how we understand and value the data we use...

Read the full article here.... 


ant

Solvency II Materiality: Size Doesn't Matter

11th November 2016

Although Solvency II obliges insurers to disclose material information, the regulations do not define what makes an asset material.

Materiality is about more than just market value. Insurers need to start paying more attention to capital requirements than market value when it comes to setting materiality thresholds… because risky dynamite often comes in seemingly insignificant packages…

Read the full article here.... 

(A summarised version of this piece was published in the October edition of The Actuary online magazine here)


SAAX panel

Brexit: the cost of uncertainty

28th October 2016

On 14 October MBE sponsored a panel discussion at Staple Inn, hosted by the Southern African Actuarial ConneXion (SAAX) Group, to share ideas about the implications of Brexit on financial markets, and, thereby, try to address some of the uncertainties it presents.  Read the insights we gained from the well-attended and very thought-provoking event here.... 


Couple Climbing

Solvency II: From Measurement to Management

7th October 2016

MBE recently attended the latest instalment in a series of workshops hosted by the Institute and Faculty of Actuaries on Solvency II for Life Actuaries. Read more about why liabilities have started to take a backseat in the financial modelling business here.... 


CT Forum

Claims Transformation Forum 2016 - Enhancing claims experience through people, process and technology optimisation

28th September 2016

Claims has been identified as the opportune focus area for insurance companies to improve efficiency and reduce costs.  With the current focus on improving the claims areas in insurance companies as a backdrop, MBE recently partnered with IQPC on their Claims Transformation Forum in London.  Read our key takeawys from the forum here.... 


clouds

RISK MODELLING CHALLENGES - Towards the cloud

9th September 2016

MBE recently attended a webinar hosted by The Actuary magazine entitled ‘Risk Modelling Challenges – Towards the Cloud’.  Read our summary of the benefits and challenges of cloud computing in the Insurance Industry here... 


Gorillas IV

GORILLAS THAT WE MISSED and other process improvement pitfalls – PART IV

21st April 2016

Over the last few weeks, we have published a series of articles on common pitfalls we have come across when companies take on process improvement projects that involve the automation of tasks. This last instalment will examine how to deal with exceptions – as constructive as automation can be, sometimes it’s just not worth the bother!  

Part IV: Exception Expectations... 


Gorilla III

GORILLAS THAT WE MISSED and other process improvement pitfalls – PART III

14th April 2016

In this four-part series, we look at the hidden costs of successful transformation projects...and how automation of processes can sometimes be pitfalls rather than windfalls.

Part III: Locking in Waste... 



Gorillas II

GORILLAS THAT WE MISSED and other process improvement pitfalls – PART II

7th April 2016

In this four-part series, we look at the hidden costs of successful transformation projects...and how automation of processes can sometimes be pitfalls rather than windfalls.

Part II: HR Mismanagement: Putting the 'sour' into Human Resources... 


Gorillas I

GORILLAS THAT WE MISSED and other process improvement pitfalls – Part I

30th March 2016

In this four-part series, we look at the hidden costs of successful transformation projects...and how automation of processes can sometimes be pitfalls rather than windfalls.

Part I: Not flexible? Not Future-Proof - How inflexibility can stifle progress... 


Holistic solutions

MBE: Providing holistic solutions to complex problems

29th March 2016

Since its establishment in 2008, Muller Beukes Edvardsen (MBE) has evolved into a trusted service provider for an industry characterised by complexity. Complex problems require multi-faceted solutions, and MBE has developed a unique approach to problem-solving, which focuses on drawing on a diverse range of skill sets in order to add value to clients. By combining highly specialised actuarial, process and IT expertise with a culture of building sustainable partnerships, MBE is able to deliver high impact, holistic and bespoke solutions, while remaining flexible and approachable. 

Read more about our offering and approach here...  


Frontrunner

A holistic approach - why MBE is a Solvency II Frontrunner

10th February 2016

MBE have been named as a Solvency II Frontrunner by Insurance ERM. 

Read why and watch the interview with MBE's Vibeke Edvardsen and Matthew Brittan here... 


Compliance by association

Compliance by Association – 
why asset managers should care about TAS

21st December 2015

Compliance with the Technical Actuarial Standards (TAS), the standards framework set for actuaries by the Financial Reporting Council, is compulsory for those members of the Institute and Faculty of Actuaries engaged in traditional actuarial work in the UK. This means that actuaries carrying out Solvency II-compliant Capital Requirement calculations are subject to the requirements around (amongst others) Modelling, Data and Reporting as dictated by the standards, and are ultimately responsible for any judgement calls made on the data or application of the standard.  

But, as was outlined in a previous MBE article, An Asset to the Insurance Industry, just because the standards apply to insurance companies, it does not mean that other stakeholders in the industry do not have a role to play in helping to meet these standards. Read more here...  


Asset

An Asset To The Insurance Industry

13th October 2015

Not much of the insurance industry has been left unscathed by the upheaval of its regulatory climate and the associated evolution of attitudes towards risk and risk management. Before, insurers and the asset managers with whom they invested, enjoyed a polite, yet arm’s length acquaintanceship. Now, thanks to expectations around transparency (for example, look-through data requirements), the two factions have been thrust together to forge a level of intimacy for which neither had quite been prepared.

This insight piece examines how asset management firms can use their knowledge of look-through data to assist insurers in their Solvency Capital calculations. Read more here... 


Process mapping

Is Process Mapping An Underrated Skill?

24th June 2015

We recently came across a fascinating article by the Process Excellence Network: 10 Deadly Sins of Process Mapping (And How to Fix Them)

Process Mapping is a valuable and powerful, yet really simple, tool that Process Consultants use all the time. There are a few pitfalls to avoid as this article explains, but having a picture of how a process is completed (rather than the way the procedure says it should be completed) is no doubt a great start to identify the improvements.

Process mapping is one of the most used tools in our MBE toolbox when helping our clients. Why is it that companies don't see this as a more permanent skillset to have as part of their day to day operations?

Please comment below - we would love to hear your thoughts! 


Data Governanace

Data Governance - why all the fuss?

3rd June 2015

Data governance is a hot topic these days...partly because of regulatory requirements coming into force on 1st January 2016, but beyond that, a firm grasp on data management can really help firms achieve great results.

In, short, data governance is a quality control discipline that covers the obtaining, management, storage and usage of information or data within a business, with the objective of maximising the value of the organisation’s data assets. In other words, it is about getting your data and related processes analysed, clarified, prioritised and clearly communicated, so that the business can derive value from them. Intuitively, data should be useful to whoever is using it. And because data requirements will vary between business units, it is essential that each team takes responsibility for its own data; constantly monitoring its accuracy and completeness, and ensuring that it is consistent and fit for purpose.

Implementing a Lean culture in an organisation can help set the scene for effective data governance. Lean relies on the 5S principle: sort, set in order, shine, standardise and sustain. When an environment follows these principles, everything looks easy, happens smoothly and results seem to fall into place. If one of these elements is missing, chaos can ensue. In our practice, we apply the 5S principle when structuring data governance frameworks for clients. We standardise the economic data usage by selecting a single source for data, which saves time and ensures a consistent level of data produced and used throughout the end-to-end process. Once data is obtained, we sort it; retaining the fields that add value to the process, and eliminating those that do not, as they would be a waste of IT and human resources. We then shine, or clean, the data, addressing errors, omissions and outliers. Our next step in working with clients to reengineer their processes is to set data in order by populating standardised templates, allowing the data to flow from step to step of the process, and between teams, in a value-adding way. Finally, in order to sustain good data governance, a focus on continuous improvement is essential. Once the project has been handed over and the consultants are no longer on site, it is up to the client to take ownership of the process going forward, and continually look for ways to improve efficiency.

Solvency II regulation and good practice require governance processes to be in place in respect of the management of the data quality. Having good quality data is an essential prerequisite to providing reliable results for financial reporting and in producing management information which can be used in decision-making.  Imagine an orchestra - musicians, notes, instruments, and, of course, the conductor - the orchestration would not be present with that figure. Let’s think of data governance as orchestration, but instead of musicians we have the employees of an insurance company; instead of the notes, we have processes, and instead of the instruments, we have the technology and systems. Of course, let's not forget the conductor - senior management. Thanks to the orchestration everybody enjoys great music and cultural inspiration. And thanks to data governance, the organisation will be able to leverage data as an enterprise asset.

If you have observations and comparisons around Lean and data governance you would like to share, we would love to hear from you.


Equity release

Equity Release - How Soon Is Now?

22nd April 2015

It has long been thought that products that use the equity built up in-house to generate cash will move from being a niche solution to one which is considered by the masses. Figures released by the Equity Release Council show that consumer demand for Equity Release (ER) products hit an all-time high of £1.4 billion of new loans in 2014, and shows no sign of slowing down over the long term. 

This obviously catches the eye from a customer demand perspective. Shaun Parsley examines whether equity release is the next asset line for your business to enter. Read more here... 


FSCS

Insight: FSCS Annuity Guarantee Change Encourages Investors to Enter Proposed Annuity Market

20th April 2015

The PRA has announced that annuities will be 100% protected by the FSCS scheme if an insurer fails. The PRA highlight the potential benefit to consumers of enhancing the cover from 90% to 100%. An ancillary benefit of this is that this will also help encourage potential investors into the government proposed secondary annuity market. A key risk for an investor wishing to purchase the income from an individual annuity policy holder to understand is the chances that the annuity provider could fail. Now, with the annuity 100% guaranteed by the FSCS, this counterparty risk is extinguished. 

Read more at profesionaladvisor.com and in the PRA Consultation Paper.