Business growth remains the top priority for 8 out of 15 insurance CFOs over the next twelve months, and five see it as the main focus over the next three months, according to an EY survey of 15 CFOs across major UK insurance firms.

“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," commented Yolaine Kermarrec, UK Insurance Partner at EY. "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.”

Business planning and cost reduction retain importance

Business planning and cost reduction also remain high on the agenda: 11 CFOs and eight CFOs respectively ranked these in their top three priorities

“Business planning is another top priority, and arguably more important than ever before given the complexity of the current environment," said Kermarrec. "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. Cost reduction also remains high on the agenda and will continue to be a key focus over the next twelve months. Expense ratios are under increasing pressure as claims have risen amid COVID-19 and CFOs will be keen to ensure cost reduction programmes deliver on time and within budget.”

Solvency position more critical now post-pandemic

More than 60% of respondents updated their Solvency Capital Requirement (SCR) in H1 2020 as a result of COVID-19 and 86% of insurance CFOs are monitoring their solvency position more frequently.

“Insurers’ risk profiles have undoubtedly changed due to the pandemic, with an increased emphasis on protecting the capital position," noted Kermarrec. "CFOs are taking a number of measures to maintain strong solvency ratios within the target zone and are monitoring this more frequently than pre COVID-19, driven by both management demand and increased regulatory reporting requirements.”

Greater automation of finance controls following uptick in remote working

The survey found that 62% of insurance CFOs are planning to automate up to 20% of their finance controls in the next 12 months due to the increased move to remote working

“Controls have also become increasingly important with the overnight move to remote working, and many CFOs are planning to automate a proportion of their finance controls over the next year," said Kermarrec.

Focus on sustainability

Insurance CFOs are also planning to increase focus on sustainable finance in line with regulatory requirements. More than half (54%) are at developing phase of integrating climate risk into annual report disclosures, 62% at developing phase of integrating climate risk into stress and scenario testing and 46% into governance.

"We expect insurance CFOs to progressively increase their focus on sustainable finance and climate change with regulators requiring financial services firms to integrate climate risk into their business, including financial reporting, by the end of 2021,” concluded Kermarrec.