The emerging role of a CFO in the insurance sector

Over the years, businesses have undergone rapid transformation resulting in a paradigm shift within the organisation. While CFOs traditionally played a role limited to the core functions of finance operations - accounting, budgeting, auditing, and taxes,owing to this, the role of the CFO has broadened significantly, especially in the insurance industry. With a dynamic market environment and evolving consumer expectations, CFOs currently look at an evolution in their role to drive enterprise-wide value. CFOs are now consolidating their core finance skills with additional capabilities to effectively sustain the organisation’s long-term growth trajectory.

Role of CFOs in the insurance industry
India is one of the fastest-growing insurance markets in the world, poised to be the sixth largest by 2032. To drive this growth, insurance companies are looking to improve insurance penetration across the nation. Here, CFOs can act as strategic advisors by leveraging their insights on the organisation’s finances, market conditions, and regulatory scenarios. Additionally, CFOs are now also tasked with using new technology to improve how organisations adapt to change and create new value from data to help scale business and tap new, lucrative opportunities. The CFO today is adept at comprehending the function of all aspects - from capital allocation, business agility, and mitigation of operational risks to supply chain management, macro trends, digital adoption, and ESG. Their evolved responsibilities have equipped them with strategic business acumen pivotal to the C-Suite’s decision-making process.

Evolving customer expectations and user experience:
With the eruption of digital innovation in the insurance sector, a customer now has a more seamless access to insurance solutions. With the exponential growth of smartphone and internet users over the last few years, India has undergone a digital revolution which also opened doors for insurers to reach customers through technology. Insurance companies directly interacted with customers through digital mediums, leaving no stone unturned in assisting them to research, compare and buy policies more easily. Today’s customers are more informed on the available options and want more bespoke insurance solutions faster and more easily.

India has undergone a digital revolution which also opened doors for insurers to reach customers through technology

The few years have lead the customers to have access to everything from the safety and comfort of their homes at the click of a button and their expectations form insurance solutions are no different. This impacted insurance distribution models and compelled many companies to put equal importance on direct-to-consumer insurance channels. In such scenarios, it’s the CFO who provides key insights into where an insurer can create greater value. By employing data-driven insights to identify tactical possibilities for their firms, CFOs are emerging as business partners and strategic advisors for their companies.

Building agile teams:
Insurance companies have a long history of using analytics, but their use of these techniques is frequently constrained by a lack of enterprise-class tools and technology. To encourage better business decisions throughout the company, CFOs are spearheading the adoption of high-performance analytical tools underpinned by a well-governed data foundation. As digitalization becomes more widespread in the insurance sector, the strategic CFO will also have to face the challenge of building the right team to support the financial function. Insurance CFOs are now not only catalysing the recruitment of talent with specialist skills but also encouraging cross-team collaboration to achieve strategic goals.

"As digitalization becomes more widespread in the insurance sector, the strategic CFO will also have to face the challenge of building the right team to support the financial function"

Stronger focus on risk management:
A deep understanding of risk management and the ability to model multiple scenarios are equally critical factors in helping to make fully informed business decisions. CFOs are the catalyst for competitive advantage that enable growth in enterprise value and reduction in risk. CFOs are now required to understand advanced analytics to uncover insights from in-depth data to discern ways in which their organizations can potentially grow value or reduce risk. Soon, the insurance industry is likely to adopt AI and incorporate machine learning on data sets for real-time analysis. In this case, CFOs are likely to be flagbearers of advanced tools that deliver easy access to information, and aid decision-makers across the enterprise reduce underwriting and actuarial risk, evaluating reserves, optimising pricing, and calculating return on capital investments.

CFOs are playing a pivotal role to shape the future of the insurance industry
A successful CFO today is a cross-functional leader with exceptional communication skills and a unique vision for addressing complex situations. It is this type of individual who can genuinely help insurers achieve higher growth, reduce risk, and uncover greater opportunities. For improved corporate reporting and strategic planning, CFOs will need to upskill their staff and reconsider career paths, especially in the areas of sustainability, advanced data analytics, and emerging technologies.

Rikhil Shah joined SBI General in 2010 and quickly rose up the ranks to become the Chief Financial Officer in 2015. His key responsibility areas include formulating and monitoring policies, setting up of internal controls, Accounting, Taxation, Budgeting & Financial Planning, MIS, and Capital Planning for the company. In his role as the CFO, Rikhil is actively involved in all strategic and organizational decision-making processes.He has more than a decade of experience and is instrumental in setting up the entire finance team and putting in place the control and process system for SBI General. He put forward the idea of cost culture into the company and successfully brought costs under control without compromising on quality or goals. Prior to joining SBI General, he was working with HDFC Ergo in the capacity of Finance Controller.