Last year, Top Gear alum Jeremy Clarkson learned firsthand that running a farm starts with planting the right seeds in the right fields at the right time to yield the best result. As many insurers are hitting the peak of planning season, we thought we’d take a moment to highlight some interesting trends and best practices we are observing about the process this year. Many insurers are increasing their investment in technology capabilities, which should yield good results in the future.
Early results from our 2022 budgets and projects survey show that while investment on the life/annuity/benefits side is fairly level, the average IT expense ratio for property/casualty insurers is a bit higher than last year, mostly due to a large number of midsize property/casualty insurers bumping up their investment to 6%-8% of direct written premiums. Insurers continue to report distributor ease of business, speed to market, and reporting and analytics as top priorities for 2022.
Most insurers conduct a fairly traditional planning process. Typically kicking off in the late summer, the process involves top-down planning by the executive team, followed by departmental/divisional planning to align with strategic goals and enable departmental strategies. All too frequently, IT is the catch-all, “last-in” business plan to be completed, becoming the first point of constraint for resources, driving the need for additional prioritization and rescoping very late in the game.
Effective CIOs often consider the planning season to be an extension of IT’s regular business relationship management. IT is at the table year-round, planning IT initiatives in tandem with the other business units. Successful business planning often involves all levels of the organization, soliciting feedback from team members through facilitated SWOT exercises or brainstorming sessions.
Some insurers successfully employ a lean approach to business planning, leveraging frameworks like Hoshin Kanri that provide a well-defined process and set of tools to establish goals, implement goals, and continuously improve. Others approach business planning with broad strokes at the highest level and use concepts like block funding to push business and investment planning down to the Agile business unit level. Regardless of your approach, it is clear that great business planning is an ongoing process and a natural result of great IT and business alignment.
This autumn’s seeds are next year’s harvest. Please let us know how we can help tend to your plans.
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