epm for insurance: better planning & detailed analysis for insurance rita 7th april... · epm...
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EPM for Insurance: Better Planning & Detailed Analy sis
Margarita Varvitsioti EPM Sales Manager, Romania and GCMM 7 April 2011
The following is intended to outline our general product direction. It is intended for information purposes only, and may not be incorporated into any contract. It is not a commitment to deliver any material, code, or functionality, and should not be relied upon in making purchasing decisions. The development, release, and timing of any features or functionality described for Oracle’s products remains at the sole discretion of Oracle.
• Insurance Market Conditions
• Overview Enterprise Planning & Detailed Analysis
• Oracle Insurance Customers
Agenda
Insurance Market Dynamics The needs that drive your business decisions
OPERATIONAL EFFICIENCY
BU
SIN
ESS
AG
ILIT
Y
RISK
&
CO
MPLIA
NC
E
Life General
Benefits & Health
Life General
Benefits & Health
Insurance Insurance
The Diversity Of Economic Development & Insurance Penetration Raises Concerns For Insurers In Europe
Challenges in the Europe Insurance
Industry
Rebuilding capital and re-evaluating core businesses
• Companies face the challenge of simultaneously rebuilding capital and growing revenues by evaluating their existing business models and product offerings to achieve the optimal use of scarcer capital
Developing a holistic approach to risk management • There are numerous issues
surrounding the integration of risk into a company’s operation and the effects on the decision-making process that insurers need to address
Preparing for Solvency II implementation
• The cost of implementing this new regulation will be significant in terms of financial an human resources
• Solvency II will represent a major investment for all
Reprioritizing investment in expansion
• Targeted opportunities may emerge for financial institutions as they shed insurance businesses in an effort to divest themselves of non-core operations and make up for capital shortfalls
Handling increasing complexity in a changing regulatory environment
• Consumers, rating agencies and regulators will be seeking greater transparency in insurers’ financial conditions
• This creates challenges in reporting key performance measures to consumers, investors and regulators
Capitalizing on opportunities for retirement products and health insurance
• Insurers will continue to find new product opportunities in 2011
• from the ageing of Europe’s population
Source: E& Y report, Jan 2010
5
6
Solvency II To Redefine IT Infrastructure Of Insura nce Companies In Europe
Solvency II Framework
From a Technology Perspective, Each of the Program Pillars Presents a Different Set of Challenges to Overcome:
Pillar One - Quantitative Data quality will be key to producing reliable calculations
Pillar Two - Qualitative IT governance, internal audits and automation are all key elements
Pillar Three - Disclosure & Transparency Underlying data models will support the necessary reports and dashboards for internal and external consumption
Delivering a Solvency II Technology Program Will Require 3 Key Elements �Integrating existing systems which will now be required to work together �Changing those existing systems as necessary �Adding new tools where existing technology cannot be adapted to meet requirements
Source: Delloitte, KPMG
7
Chief Actuary
� Faster production of information in real time
� Graphical and analytical reports for the regulators and the business
� Faster financial close � Sensitivity and what if analysis
� Centralised and consistent modelling platform for all actuarial users
� Automated modeling processes � Audit & security controls for governance
and compliance
Chief Risk Officer
n Internal model approval n Understanding of key assumptions
n Risk calculations to accurately reflect the underlying risk profile
n Enterprise-wide consistent risk management standards
n Auditable and transparent modelling and risk processes
n Graphical and analytical reports for the regulators and the business
Chief Information Officer
� Robust IT governance � Power to run complex models
n Centralised modeling platform based on standard Microsoft technologies
n Deployment across the enterprise n Seamless integration with other
enterprise systems n Centralised database for enterprise
access n Automated data extraction/
transformation
Chief Financial Officer
n Consistency of external reporting (e.g. IFRS, SII, MCEV)
n Faster, controlled production of accounting reports – e.g. inputs to IFRS statements
� Graphical and analytical reports for the regulators and the business
� Faster financial close
CA
CRO
CIO
CFO
CEO
Solvency II Programme
Enhanced business performance through risk-based decision making
Stakeholder Requirements
Solvency II - Phases
� SII is complex and impacts the enterprise as a whole.
� For most major insurers SII is likely to be implemented in two phases
� Tactical approach to achieve initial compliance - e.g. QIS 5 and Internal model approval
� Largely utilizing existing components
� Spaghetti and sellotape “wrap” approach
� Focus on data and capital numbers
Phase 1 – Compliance
� Strategic approach
� Enterprise based ERM Platform
� Replacement of legacy components
� Deeper embodiment of risk culture within the business
� Lower total cost of ownership
Phase 2 - Consolidation
TACTICAL STRATEGIC
2010 2012 2011
2010
2014 2013
2012
2015
9
• Corporate and Business Segment Overview
• Performance Overview
• Industry Observations and Trends
• Industry Solution Overview
• Customer Case Studies
Agenda
ENVIRONMENT
OPERATIONAL EXCELLENCE
Priorities and Pressures on the CFO
REGULATORY
COMPETITION/ CUSTOMER
CHOICE
EfficiencyEfficiency
VisibilityVisibility
AgilityAgility
Business TransformationBusiness Transformation
Our Vision for Solvency II
Oracle Solvency II Vision
Enterprise Risk Management Platform
Insurance, Risk & Actuarial Data
Audit, Security & Compliance
Risk & Actuarial Modeling Engine
Computing Power & Scalability
Reporting & Analytics
Future Proofed Capabilities
C
orporate ER
M
Common Technology Platform
Audit, Security & Control
General Ledger
Financial Systems
Oracle Integrated Actuarial, Risk & Finance Platfor m
Reporting/Analytics Engine
SII Management Reporting IFRS
• Continuous Solvency Monitoring • Dashboards • What-If & sensitivity analysis • Performance Management
Policy Systems
Claims
Investment Systems
Source Data
Compute Grid
ALM
Standard
Model
ESG
Product Development
•Financial Consolidation
•Product Profitability
Policy Data
Operational Risk
Credit Risk
Insurance Risk
Market Risk
Cash Flows & Valuation
Replicating Portfolios
•Strategic Financial Planning
•Budgeting
Actuarial & Risk Engines
Pricing
Economic Capital Aggregation
Financial Consolidation
Meta Data Management, Reconsolidation Framework & Proces s Flow Automation
Data Warehouse
Operational Data
Actuarial/Financial Data
Reports/Analytics
Five Core Management Processes
13
14
Case study of Actuarial Spaghetti!
15
Impact of poorly integrated Management Processes
Copyright © 2010 Oracle and/or its affiliates. All rights reserved.
Introducing Oracle’s EPM System From Beginning to Winning
Oracle’s Enterprise Performance Management System Complete, Open, Integrated
Excel XML
OLTP & ODS Systems
Oracle, PeopleSoft, JDE Siebel, SAP, Fusion
Business Process
Data Marts Data Warehouse Database Machine
OLAP Cubes
Business Intelligence Foundation
EPM and BI Applications
Information Delivery
Copyright © 2010 Oracle and/or its affiliates. All rights reserved.
Interactive Dashboards
Reporting & Publishing
Ad-hoc Analysis
Detect & Alert
Mobile & Disconnected
Office Integration
Search Embedded
Common Information Delivery Secure, Role-based, Information Access & Delivery
Excel XML
OLTP & ODS Systems
Oracle, PeopleSoft, JDE Siebel, SAP, Fusion
Business Process
Data Marts Data Warehouse Database Machine
OLAP Cubes
Business Intelligence Foundation
EPM and BI Applications
Copyright © 2010 Oracle and/or its affiliates. All rights reserved.
Copyright © 2010 Oracle and/or its affiliates. All rights reserved.
One Window, Not Multiple Oracle EPM Workspace
• Self-service Personalization
• Contextual navigation
• OBIEE and BI Publisher integration
• WebCenter integration
• Spans all solutions in the Oracle EPM System
Copyright © 2010 Oracle and/or its affiliates. All rights reserved.
Unified Microsoft Office Interface Smart View for Office
• Adhoc Reporting
• Stylized Output:
• Formats
• Tables
• Charts
• Formulae
• Data Entry and Apps Processing
• Word and PPT
• Now works with OBIEE as source
Copyright © 2010 Oracle and/or its affiliates. All rights reserved.
Common Foundation Services
• Common User Provisioning • Common Application
Administration • Common Calculation
Manager • Common Installation and
Configuration • Common Lifecycle
Management
Oracle’s Enterprise Performance Management System Complete, Open, Integrated
Business Intelligence Foundation
EPM and BI Applications
Information Delivery
Excel XML
OLTP & ODS Systems
Oracle, PeopleSoft, JDE Siebel, SAP, Fusion
Business Process
Data Marts Data Warehouse Database Machine
OLAP Cubes
ERP Analytics
Strategy Management
Financial Close and Reporting
Planning & Forecasting
Profitability Management
CRM Analytics
Industry Analytics
Essbase BI Server Dimension Management
Predictive Analytics
Interactive Dashboards
Reporting & Publishing
Ad-hoc Analysis
Detect & Alert
Office Integration
Search Embedded Mobile
Scorecards Collaborate
Market-leading Performance Management Applications Suite
Strategic Planning
Cost & Profitability Management
Financial Close Process
Planning and Budgeting
Data Cleansing
Consolidate Internal Reporting & Analysis
External Reporting & Analysis
Governance, Risk & Compliance
Audit & Certify Financial results
EPM Governance Shared Master Data Lifecycle Manager Data synchronisation
Improve Timeliness and Confidence in Financial Close & Reporting
Implementing a World Class Close Oracle’s Extended Financial Close Solution
Financial Consolidation
Data Assurance
Document
Management & Filing
Financial and Mgmt. Reporting
ERP: Oracle, SAP, Legacy, Other
Tax Filing
Financial Close Management
CFO Dashboard
Tax Calculations
Transactions Reporting
Governance, Risk & Compliance
Oracle Hyperion Financial Management Accelerate Reporting Cycles and Reduces Costs of C ompliance
Copyright © 2010 Oracle and/or its affiliates. All rights reserved.
• Patented financial consolidation and reporting features
• Complete audit trails, workflow and validations
• “Smart Dimensionality” • Flexible “what if” scenario
management features • Powerful, reporting and analysis tools • Full integration with GL and other
transaction systems • Easy to customize and extend • Web-architected
Fast and Reliable Financial Reporting
• Sustainable reporting architecture to deal with the myriad of reporting requirements unique to insurance
• World class financial consolidation and reporting platform reduces internal control risk
• Delivers single version of the truth for financial reporting • Data integrity tools built into the close process • Seamless integration with your existing financial systems • Web-based architecture allows for world-wide collaboration on
the close process
• Author statutory documents from Smart View for Office • MS Word and Excel for
authoring • Direct integration with HFM
and Essbase • Support for all required report
formats: MS Word, HTML, PDF
• Embedded XBRL tagging support • Taxonomy Management • Instance document creation
and validation
Oracle Hyperion Disclosure Management Statutory Reporting Made Simple
The Only Vendor Offering Financial Master Data Management
• Consolidate & rationalize dimensions across source systems
• Change management for dimensions • Conform dimensions & validate integrity
of attributes and relationships • Align alternate business views • Key features include:
− Business experts configure & maintain − Versioning and modeling − Custom business rules and validations − Derived & inherited attribute values − Configurable exports − Granular security − Enhance compliance & governance − Workflow integration
COMPANY OVERVIEW • $1.9 trillion in Assets • 115,000 employees
CHALLENGES/OPPORTUNITIES • Frequent mergers, acquisitions, divestitures
and financial reorganizations • Complex financial structures with compound
inter-company trade relationships, eliminations • Need for financial accuracy required rigorous
manual testing cycles and reconciliation efforts for every significant change
• Financial master data had been centralized in a financial data warehouse (FDW), but the FDW lacked change management features
RESULTS • Implemented Hyperion Data Relationship
Management to master chart of accounts (entities, accounts, projects, products, etc.)
• Automated enforcement of financial business rules – example: All asset accounts must be mapped to one or more risk types
• Greatly reduced risk of inconsistency between GL and EPM applications
• Impact analysis - Ability to understand how hierarchy changes effect specific legal report lines
SOLUTIONS • Hyperion Data Relationship Management • Hyperion Data Integration Management
Align Hierarchies Across ERP and EPM
Rising to New Levels of Accountability
Attention to Internal Controls over Financial Reporting State insurance commissioners zero in on financial reporting
3
2
1
Financial reporting is core to proving financial strength
and solvency
State commissioners consider financial reporting as the
underpinning to their solvency and fraud oversight activities
Bad economy has heightened insurance
claims and fraud
NY, FL, WI State Fraud Bureaus reported a one-third increase in the number of insurance fraud
cases in 2008.
Fraud threatens the financial solidity of insurance companies
and their public confidence capital
Insurance Company
Fraud Loss
Mortgage $4 -6 B
Property & Casualty $30B
Health $68-226B
The cost of fraud bears on insurers as well as policy holders who pay
higher premiums
End-to-End Policy & Process Management Governs Risk and Compliance Activities
Enterprise Control Management Detects and Prevents Control Failures
Integrated Analytics Deliver Actionable Insight
!!
Oracle Model Audit Rule
End-to-End Policy & Process Management Governs Risk and Compliance Activities
Enterprise Control Management Detects and Prevents Control Failures
Integrated Analytics Deliver Actionable Insight
!!
Oracle Model Audit Rule
What users have done
What’s changed in the environment
What are the execution patterns
Detective Controls
What users can do
How the environment
is setup
How users execute
processes
Preventive Controls
ACCESS Controls ACCESS Controls
CONFIGURATION Controls CONFIGURATION Controls
TRANSACTION Controls TRANSACTION Controls
Enforce Policies in Context
Monitor Control Effectiveness
Enterprise Control Management Detect and prevent control failure
End-to-End Policy & Process Management Governs Risk and Compliance Activities
Enterprise Control Management Detects and Prevents Control Failures
Integrated Analytics Deliver Actionable Insight
!!
Oracle Model Audit Rule
Oracle Enterprise GRC Manager
This is to notify you of AML and SOX alerts. The Executive Dashboard is awaiting your review.
Please use the following link to access your reports
Go To “Executive Dashboard”
� Summarized view of key
information highlighting potential trouble areas
Enterprise Visibility to GRC Status Secured and targeted delivery of role-based dashboards
Dynamic Analysis and Decision Support Variety of charting and display options
Getting to the Root of the Issue Drill down from dashboard to detailed transaction
Cross-Enterprise Risk Analysis Reporting on Oracle and non-Oracle data sources
Consolidated view of financial balances from Hyperion Financial Management and risk rating from GRC Manager
Extend Planning Reach Across the Enterprise
AVG. HOURS FOR FINANCIAL MODELING
Reduce Budget Cycle by Months, Scenario Analysis by More Than 50%
Copyright © 2009, Oracle and/or its affiliates. All rights reserved. 42
MONTHS TO ASSEMBLE BUDGET
Run models based on key strategies
Set targets
Seed targets to annual operating plan
Start annual process
Update strategic plan with latest forecast
Evaluate resource and capital requirements
Achieve a World Class Enterprise Planning Process
Assess and Manage Risk
Copyright © 2009, Oracle and/or its affiliates. All rights reserved. 43
Validate operational feasibility to financial plan
Update forecast with latest budget and actuals
Disconnected Processes Lead to Inefficiency and Missed Targets
• Time – cycles take too long, missed opportunities and obsolete plans
• Quality – data integrity, lack of standardization and communication
• Flexibility – lack of responsiveness to changes
• Cost – many wasted resources, questionable benefits
Copyright © 2009, Oracle and/or its affiliates. All rights reserved. 44
FP&A
Senior Management
Annual Plan & Forecast
Revenue & Cost Models
M&A
Departmental Plans
Headcount Plans
Treasury Plans
Long-Term Planning
Critical Components to Implement Planning Best Practices
Copyright © 2009, Oracle and/or its affiliates. All rights reserved. 45
Capital Assets Planning
Workforce Planning
Long-Term Financial Planning
Financial Detail
Operational Detail
Predictive Modeling & Simulation
Operational Revenue & Cost
Modeling
Planning, Budgeting & Forecasting
Functional Plans
Project Planning
Marketing Planning
Forward-looking Analytic Engine
Key Capabilities Accelerate the Enterprise Planning Process
• Centralized system
• Align top-down and bottom-up • Consistent assumptions • Common allocations &
calculations • Integrated Operational Planning
to address in-depth revenue and margin planning
• Purpose-built Capital Assets and Workforce planning modules for fast deployment
• Powerful workflow and process management for budgeting and forecasting
• Leverages Essbase – powerful reporting and analysis
Copyright © 2009, Oracle and/or its affiliates. All rights reserved. 46
Revenue Forecast
Balance Sheet, P&L , CF IFRS Reporting
Expense
• Estimation about industry potential and market share • Distribution of total premium (time/ channel/region) • Assignment of quotas to agencies • Defining average price of insurance policy
Financial Planning in Insurance Scope
• Predictive Analysis for “usage “ ratios. • Calculation of direct expenses (Commissions, Legal Expense, Health and Welfare, Loss Expense) • Derivation, Collecting or Calculation of Indirect & Fixed Expenses • Financial Expenses, Funding & Investment Planning
Manage Staff Expenses of Thousands of Employees
Before
� Days to get HR data in � 8 weeks for first budget iteration � 10 days to transfer employees � 4 weeks to create and distribute
Excel templates � Data was not dependable � Corporate budget group had 9 FTE’s
to maintain the process
After
� Few minutes to enter HR data � 4 ½ weeks for first budget iteration � Reorganizations down to 24 hours � Next phase scale to 50,000 employees � Detailed budget to 700 accounts � Rapid user adoption due to user
friendliness
One of the 20 largest financial institutions worldwide and ranked in top 10 in Europe.
Implemented initial budget for 10,000 employees within 4 months
• Forecasting • Scenario comparison • Trending • Goal seeking • Procedural calculations • Custom Calculations • What if testing
Key Capabilities Predictive & Detailed Analysis
Copyright © 2009, Oracle and/or its affiliates. All rights reserved. 49
•Historic & Projected ratios – (IRR,NPV) •Industry standards comparison •Loan capacity ratios • Annual dynamic What-If analysis •Best/Worst case scenarios (Sensitivity analysis) •Comparison analysis - personnel, sales, advertising, income, cash flow, balance sheet •Overdraft scenario
Quantify Risk and Uncertainty
• Only 3 possible outcomes • Limited view of risk • What are most important risk factors? • What are the odds I’ll miss the target? • Which outcome is most likely?
• Full range of outcomes • Illustrate probability of outcomes • Immediate visibility into inherent risk • True risk analysis for financial models
Conventional Single Point Scenarios
Advanced Thinking in Ranges
Copyright © 2009, Oracle and/or its affiliates. All rights reserved. 50
• Assign probability distributions to uncertain assumptions
• Run thousands of simulations
• Analyze range of outcomes and probabilities
• Assess model sensitivities
Efficient and Accurate Planning & Budgeting
• Supports 1,000s of users globally • Improves user understanding of product dynamics • Identify metrics based drivers of operational planning • Utilize drivers in plans and forecasts • Reinforces behaviors that lead to results • Allows comparison between LOB • Plug-in Workforce Planning module ideal for
managing large employee populations into planning process
Increase Marketing Campaign ROI
Before
� Need to improve the effectiveness of financial advisor activities and increase ROI of marketing campaigns
� Necessity to transform customer interaction and analytics from departmental “silo” approach to more holistic model
� Desire to use information to minimize customer attrition and maximize share of wallet
AXA Financial had $888.6 billion in assets under management as of December 31, 2007. AXA Financial is a member of the global AXA Group, a worldwide leader in financial protection and wealth management.
After
� Richer customer insight & segmentation; better targeting and higher campaign ROI
� More effective cross-sell and up-sell � Greater marketing ROI, triggered by alerts
monitoring customer events � Re-connect with high value “orphaned”
accounts; successful win-back programs � Stronger relationships between advisors
and customers, key metrics on advisor performance
Oracle Scorecard & Strategy Management Strategy Management & Goal Setting
• Integrated BI component • KPIs as core metadata • Thresholds, owners, history • Auto-generated interactive analyses • Linked objectives & initiatives
• Automatic detection • KPI alerts triggered by thresholds
• Strategy visualization • Strategy Maps and Trees • Cause and Effects • Watch lists • Annotations & override
• All methodologies • Balanced scorecard, six sigma,
Baldrige
Meeting with different analysis needs
With Who ? Historic / Current Forward Looking / Modelling
Executive Management
� Revenue Performance � Loss Ratio Analysis � Recovery Performance � Product Penetration � Channel Performance
• Future Revenue Performance and Profit & Loss Analysis by LOB / Product / Geography • Market Share, Penetration, Strategic Planning Simulations • Risk Exposed Financial Planning
Claim � Top Open Claims � Claims Distribution by Status � Claim Resolution Trends � Claims Payment Lag by Region
• Predictive Analysis for trend • Analyze trends at the claim rep, team, or company level •What-if Analysis for expected claim related ratios
Policy Sales (Marketing)
� Quote to Buy Performance � Top 10 Partners by Production � New & Renewal Business Perf. � Avg. Opportunity Follow-up
Time
� Customer Portfolio & Profitability � Product Performance Analysis � Marketing Campaign Analysis
Policy Service
� Customer Satisfaction � Service Requests Analysis � Claim Element Resolution Time � Total Delay in First Response
• Detailed Costing for current and future policy serving actions • Accurate Cost Allocation for shared & indirect services
Agents � Average Agent Production � Top 10 Agents Performance � Agent Satisfaction by Tier
• Reducing avg.time for claim requests by providing detail analysis & modelling
Oracle Insurance Offerings Accelerate Planning Predictive & Detailed Analysis
• Revenue Perf. and P&L by LOB / Product / Geography
• Predictive / What-if Analysis • Detailed Costing Analysis
� Overall Financial & Business Performance Analysis
Executive
Management
Finance
• Sales & Revenue Analysis • Fees & Commissions Analysis
• Sales Performance Analysis
Sales &
Distribution
• Customer and Portfolio & Profitability
• Product Performance Analysis • Marketing Campaign Analysis
Marketing Product Man.
Risk Exposed Financial Planning Running different scenarios
Risk
Management
• Revenue Forecasting • Centralized Planning
• Rolling Forecast
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Customer Success
Copyright © 2009, Oracle and/or its affiliates. All rights reserved. 56
Oracle EPM in Life and P&C Insurance
Oracle EPM in Health Insurance
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The Oracle Difference
Copyright © 2009, Oracle and/or its affiliates. All rights reserved. 59
Oracle Confidential - For Internal Use Only
Oracle Positioned in Leaders Quadrants
The Magic Quadrant is copyrighted 2011 by Gartner, Inc. and is reused with permission. The Magic Quadrant is a graphical representation of a marketplace at and for a specific time period. It depicts Gartner's analysis of how certain vendors measure against criteria for that marketplace, as defined by Gartner. Gartner does not endorse any vendor, product or service depicted in the Magic Quadrant, and does not advise technology users to select only those vendors placed in the "Leaders" quadrant. The Magic Quadrant is intended solely as a research tool, and is not meant to be a specific guide to action. Gartner disclaims all warranties, express or implied, with respect to this research, including any warranties of merchantability or fitness for a particular purpose. These Magic Quadrant graphics were published by Gartner, Inc. as part of larger research notes and should be evaluated in the context of the entire reports. The Gartner reports are available upon request from Oracle.
Sources: Gartner, Inc., “Magic Quadrant for Business Intelligence Platforms, 2011” by Rita L. Sallam, Bill Hostmann, James Richardson, John Hagerty. 27 January 2011 Gartner, Inc., “Magic Quadrant for CPM Suites, 2010 “ by Nigel Rayner, Neil Chandler, John E. Van Decker, 25 January 2010 Gartner, Inc., “Magic Quadrant for Data Warehouse Database Management Systems, 2011” by Donald Feinberg, Mark A. Beyer, 28 January 2011
Magic Quadrant for Business Intelligence
Platforms, 2011
Magic Quadrant for CPM Suites, 2010
Magic Quadrant for Data Warehouse Database
Management Systems, 2011
The Oracle Difference Fulfill Obligations by Managing and Enforcing Policy
3 3
Continuous Controls Monitoring Leader2
1 1
Hundreds of Pre-delivered Analytics
2 2
Enterprise GRC Platform Leader1
Source: 1Gartner Magic Quadrant for Enterprise GRC Platforms, 2009 2Gartner Magic Quadrant for Continuous Controls Monitoring, 2010