EPM for Insurance: Better Planning & Detailed Analysis for Insurance RITA 7th April... · EPM for Insurance: Better Planning & Detailed Analysis ... • OBIEE and BI Publisher

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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


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


Business Process


OLAP Cubes





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


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


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



Information Delivery

Excel XML

OLTP & ODS Systems


Business Process


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


• 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




!!


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




!!


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


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


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


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


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


•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


• 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


Customer Success


Oracle EPM in Life and P&C Insurance

Oracle EPM in Health Insurance


The Oracle Difference


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

Documents

EPM for Insurance: Better Planning & Detailed Analysis for Insurance RITA 7th April... · EPM for Insurance: Better Planning & Detailed Analysis ... • OBIEE and BI Publisher