Using software to cut the cost of compliance: three families of software applications—financial management, workforce management and business intelligence software—can help carriers compete

Bob Peterson


* Insurers have had to reconsider the flow of their business processes and information-technology systems because of the new financial-reporting regulations.

* To keep ahead of regulations and their peers, carders should look into three particular enterprise applications.

* In a comprehensive form, these applications will provide a business system that supports solid accounting practices, automation of processes, information centralization and tight control of administrative project costs


Insurers collect and maintain mountains of data from numerous sources. This data may be directly related to servicing new and existing clients or managing the business by analyzing financial, human resources and other internal processes.

Yet, many insurance companies struggle to transform this data into information they can quickly access to meet evolving regulatory reporting needs, drive customer loyalty and increase market share.

Starting in 2005 with the Sarbanes-Oxley Act and industry-specific financial-reporting regulations set forth by the National Association of Insurance Commissioners, insurers have had to reconsider the flow of their business processes and information-technology systems. These rules and regulations have extracted massive amounts of time and resources from executives, managers and staff across the entire spectrum of insurers’ business.

To comply with these evolving guidelines, insurers began implementing new technologies and practices. Applying lessons learned from the initial phase of SOX compliance, insurers found and continued searching for ways to reduce the complexity and costs associated with compliance. Many have learned that this ongoing reporting process requires ongoing investment. While the initial effort for SOX and NAIC financial reporting and compliance is complete, insurers are now fine-tuning their compliance initiatives before new processes are fully ingrained within the company.

Forward-looking insurers are going beyond what’s required by current industry regulations. They are creating systems and processes that not only ensure they meet evolving regulatory guidelines, but also drive efficiencies that benefit customers, extract data that helps ensure better service to these customers and ultimately create a competitive advantage.

So, how well is your company currently handling the abundance of data pushed through your business processes and IT systems? For example, does your procurement system “talk” to your financial system? Do you have documented processes that flow between your payroll and other HR systems? If not, you cannot expect to drive competitive advantage.

To move beyond manual processes for accessing data to support compliance needs, drive customer loyalty, increase market share and ultimately, drive competitive advantage, insurers should seek out technologies that offer:

* Financial management software. The ability to consolidate disparate systems into one unified business system, drive business process improvements and strengthen financial discipline.

* Work-force management software. The capacity to automate administrative processes to help human resources staff increase efficiency and focus on more strategic initiatives, such as hiring and retaining the most effective employees.

* Business intelligence software. A means of creating a cross-functional, sharply focused and customizable view of all data–from financial to human resources to procurement information organizationwide. This also should enable decision-makers to assess and prioritize organizational performance and productivity to capitalize on new business opportunities.


The financial-services industry has undergone significant consolidation in recent years, perhaps more than any other industry. As insurers grow, organically and via acquisition, many face a collection of legacy financial systems scattered throughout the organization. Unfortunately, many of these legacy financial systems don’t interoperate. As a result, these disparate financial systems often force insurers to maintain time-consuming manual processes and perform duplicate data entry.

An integrated financial management system allows insurers to consolidate all financial data on one database, providing a holistic view into the financial operations of the entire organization. This allows insurers to go beyond just thinking about money, and arms them with the information they need to analyze trends and make timely, strategic decisions that benefit their entire business.

By using an integrated financial management system, insurers also are able to reduce the time and costs associated with compliance by creating an electronic audit trail and automatically creating financial reports required by NAIC, SOX and other Securities and Exchange Commission and HR regulations.


Technology is transforming the role of human resources professionals from a more traditional administrative role to that of a strategic business partner. Self-service technologies within work-force management software enable insurance companies to make employees responsible for ensuring their basic information, such as address, tax deductions and benefits enrollment data, is accurate. This lessens the HR department’s administrative burden and allows them to focus on more strategic issues, such as hiring and retaining staff, and employee development.

Another way in which work-force management software minimizes HR administrative time is through automation of routine HR activities. Completing an employee transaction today, such as a pay raise, often involves some level of paper-based processes as well as informal–and potentially biased–decision-making.

Automating this process ensures the pay raise moves through all the required approval channels while simultaneously creates an electronic audit trail. As a result, employees receive their correct raise at the right time.

Work-force management software also delivers accurate, reliable data to the right people, ensuring HR staff and managers have the data they need to make well-informed, rapid decisions about their work force, such as matching employee skills to project needs. Additionally, with the right technology in place, insurance company HR departments are able to quickly retrieve performance results from individuals or groups and can proactively identify training or motivational needs. This type of business software helps insurers gain a competitive advantage by ensuring the organization recruits and retains the best possible talent. And with the impending work-force shortage issues predicted to impact all industries, including the insurance sector, it become critically important for insurers to optimize employee performance by ensuring employees are contributing at the highest level.


Managing operations within a dynamic business environment requires insurers to adopt innovative business intelligence and analytic technologies. Insurers need access to financial and HR data across their enterprise on a continuous basis during crises, as well as during daily operations. Business intelligence software provides comprehensive and multidimensional views of business data, comprising financial, customer, internal and HR data. By having easy access to this information from a single source, insurance executives and other key decision-makers within an organization can access the information they need to quickly capitalize on business opportunities.

Of course, insurers have never lacked data. Rather, they often collect massive amounts of information on both staff and customers, from claims to emergency contact information. The challenge facing the insurance industry is turning that data into meaningful information decision-makers can use to identify and implement change.

Having the ability to react quickly requires fast and easy access to actionable information. For example, in the case of a natural disaster, insurance companies need fast, reliable access to their internal business systems to manage a spike in claims volume. Using business intelligence software, insurers can equip claims managers and other key decision-makers with the information they need to quickly access and review employee information and experience, and, if appropriate, reassign employees to help with high claims processing–ensuring prompt customer service.

Business intelligence software also helps insurance companies effectively plan for times of crisis by providing modeling capabilities to demonstrate how corporate resources might best be deployed to service widespread client needs. And, business intelligence software can help insurance companies conduct insightful opportunity analysis, drive business process improvements, effectively measure key performance indicators and ultimately evaluate performance organizationwide. This enhanced analysis Hill enable insurers to take appropriate action and mitigate risk.


Without exception, the insurance organizations that thrive possess a common trait: the ability to maintain a healthy picture of profitability. They do it with a comprehensive business system that supports solid accounting practices, automation of financial and work-force management processes, information centralization and tight control of administrative project costs.

As SOX and NAIC regulatory requirements continue to evolve, the insurance industry must adopt technologies that support automation and business process improvements. Timely business decisions require internal controls that provide proactive notifications and deliver real-time, role-based information to the right people. Companywide visibility gives decision-makers a clear view of their internal controls to guide decisions and corrective action.

Looking ahead, insurers that lack strong financial and work-force management technology and business processes, along with integrated business intelligence capabilities, Hill find it increasingly hard to effectively compete with their peers. A comprehensive enterprise system is more than the sum of its software parts–it provides insurers, regardless of size, with insights that Hill separate them from their competition.


BOB PETERSON is director of industry marketing, financial services, for Lawson Software. He can be reached at

COPYRIGHT 2007 Axon Group

COPYRIGHT 2007 Gale Group

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