Oracle EPM Delivering an Integrated Close Process for Insurance Companies

Published April 27 2021
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Over the last few years, we have seen a shift in the objectives from the Office of the CFO for insurance companies. This shift has been from a heavy focus on financial processes to an operational partner that is a catalyst for organizational change, aligns enterprise strategy to financial results, and proactively monitors risks and opportunities. This new, more modern emphasis and approach has led to driving automation into financial processes to spend less time focused on tasks and more time driving effective and informed business decisions.

Unlike many other industries, insurance companies face the need to report on, at least, two distinct accounting basis, GAAP and STAT. This results in each insurance company performing a standard set of tasks to close a period end, validate the integrity of the financial statements, and report for each accounting basis. Given the challenges and the drive of the CFO to be a strategic partner of the organization, insurance organizations need a systematic approach to completing the accounting and reporting processes in order to effectively reduce the risk for errors and omissions, provide analytics that provides insight, proactively understand and interpret results, and meet deadlines. Within this blog, I am going to focus on the benefits of using Oracle EPM for an integrated close process, which provides reliability through repeatable activities that remove manual routines and pledges to optimize the entire close and reporting process.

Five Benefits of a Modern Close Approach with Oracle EPM

An integrated close brings together the various elements of the process under a centralized technology solution. This leads to process synergies through replacing manual tasks with automated routines and providing more time to focus on things that matter most, such as analysis of unsubstantiated amounts, trend analysis of results, and strategic analytics. Below are five benefits of using Oracle EPM for an integrated close process:

1. Automation, Governance, & Controls

A key CFO objective is ensuring the accuracy of results. As a result, placing controls and governance around data integrations, both metadata, and financial data, are critical. Additionally, automation ensures data is received and delivered to and from applications accurately and without manual intervention, thus reducing risk due to misstatements, as well as reducing the risk of delayed activities in the close cycle.

2. Standardization

There are several areas of the close that typically are not standardized and lack repeatability. As a result, the tasks require significant manual effort to complete and large Excel workbooks. These activities include allocations (i.e. intercompany expenses & chargebacks, loss adjustment expenses, operational transfer pricing, etc.), cash flow reporting, intercompany eliminations, reconciliation of GAAP to STAT differences, and tax provisioning. Within Oracle EPM, you can standardize these tasks, commonly with out-of-the-box functionality, to put accounting controls in place, streamline the process for capturing the data necessary, and create a repeatable process that delivers confidence in results.

3. Task Management Visibility

The common approach to maintaining the close calendar is in Excel. It is cumbersome to maintain, it’s not real-time, and it lacks the ability to identify bottlenecks. Additionally, companies rarely adhere to it as there is no easy way to validate the progress of the underlying tasks. As you manage at least two accounting cycles (GAAP & STAT), it’s important to understand what has been completed and the interdependencies of the tasks. Also, with Oracle EPM, you can manage the end-to-end close process from pre-close activities including updating data sources and metadata, to close activities including completing operational interface reconciliations and consolidation, to post-close activities including external, management, and tax reporting.

4. Systematic Reconciliations

Whether its transaction matching (i.e. cash, claims expense, investment maturities, purchases & sales), reconciliation compliance (i.e. monthly, quarterly, annual reconciliation certification), or variance analysis, the legacy end to end reconciliation process is a time consuming and error-prone process that lacks visibility into the underlying processes and subprocesses. With multiple subledgers and subsystems, along with multiple currencies and multiple basis’s of accounting, insurance companies face complexity with the reconciliation process. Oracle Account Reconciliation removes the manual processes, standardizes reconciliations, creates a central repository, provides visibility into the process and bottlenecks, and provides a simplified approach to completing audit requests.

5. In-depth Reporting

Insurance executives rely on the accounting and finance organization to provide insightful, timely reports. However, many insurance companies rely on the standard four or five financial reports that provide a static view of financial performance. Those reports are often too detailed or too high level and lack an executive overview of performance. Additionally, they lack the visualizations that provide an overview of trends, period over period analysis, and key KPIs. With Oracle EPM, insurance companies receive impactful reporting that provides insight into the process and performance to provide a vision, identify issues that need to be addressed, and provide clarity into the underlying drivers of results. Further, to help to streamline the regulatory reporting needs, Alithya has built a solution for the statutory reporting process to help insurance companies standardize and streamline the process of capturing the footnotes, MD&A, and annual audited report.

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Shortening the Close, while Delivering Transparency & Greater Visibility

With new accounting rules, market disruption, increased scrutiny from regulators, and people change, insurance companies face several challenges on the path to closing the period end. Harmonizing the close through an integrated close process drives process optimization, which leads to a faster close, elimination of manual validation worksheets and error-prone Excel workbooks, greater visibility and transparency into the process and results, and more effective use of talent. We have helped several insurance companies implemented Oracle EPM solutions to expedite the close process, which has resulted in more time for analysis and action for identified issues, less oversight in the process, greater trust in the accuracy and reliability of results, and reduced risk for audit flags.

Some questions to think about:

  • Is your entire close process on a single technology platform?
  • Are you burdened with manual validations and reconciliations throughout the close and reporting process?
  • Are you able to identify bottlenecks and provide insight to management?
  • Are you confident in the accuracy of your close process?
  • Do you have disparate processes across your close cycle that should be standardized?

Alithya’s technical and functional knowledge of the insurance industry including reporting, accounting controls, and industry-leading practices helps provide our clients with actionable insight to decrease the time spent on the accounting and close process, increase accuracy, gaining transparency into the process, and modernize the accounting controls with a scalable solution.

For comments, questions, or suggestions for future topics, please reach out to us at infosolutions@alithya.com.  Visit our blog regularly for new posts about Cloud updates and other Oracle Cloud Services such as Planning and Budgeting, Financial Consolidation, Account Reconciliation, and Enterprise Data Management.  Follow Alithya on social media for the latest information about EPM, ERP, and Analytics solutions to meet your business needs.