Company
ARAG ITALIA is part of the German Insurance Group ARAG: with over sixty years of activity, it is one of the most important International Insurance group specialized in Legal Protection and counting over 12 million risks insured. Through controlled or connected Companies, ARAG Group operates within the following markets: Austria, Belgium, France, Germany, Greece, Ireland, Italy, Luxemburg, Holland, Portugal, Spain, U.S.A. and Switzerland. In Italy ARAG is the market leader in Legal Protection.
BOARD Solution
The recent increase in dimension and management complexity, the importance of data and the need to stimulate constant information flows with the German Head Office according to International standards, have stressed the importance of a reorganization of internal decisional systems and of more elaborate operative mechanisms in the Management Control process. All this brought to the elaboration of an Insurance Intelligence Project.
The realization of the Insurance Intelligence Project has been articulated into the following macro-phases:
- analysis of demands and planning of a business reporting model;
- individualization of information sources and formulation of a system of management and of distribution of data to be analyzed;
- implementation of single patterns of the system.
This project started after the constitution of a mixed team composed by keys players of Business Planning and Controlling and by SDG professionals specialized in service firms.
The first phases of this project have shown the existence of important information needs both at a directional level and within the main operative processes, particularly the commercial and the damage liquidation ones. The need of a more precise control of structure costs and of profitability became evident, too.
In order to cope with these needs, an integrated reporting model has been created and structured according to corresponding areas, where you can immediately pass from the most detailed analyses (even of single claims), to the most synthetic ones (according to Business Units, Range of Products, Channels…), so that it is possible to answer demands from the part of both Top Management and operative staff:
Management Area
- KPI's system with the purpose of measuring business performance in order to verify the attainment of business strategic goals
- Synthetic data organized within a special booklet containing periodical analyses of the general business
Commercial Area
- Management Reporting for an integrated analysis of commercial data, budget management and the insertion of targets
- Electronic system for the Sales Force Data Delivering
Damages Area
- Statistic Reporting for an analysis of trends in the claims area and the analysis of a portfolio of damages to be settled
- Control system for the costs of damage liquidation
- System to calculate the provision for claims
- Operative Reporting to measure performance in the liquidation process
Accounting Area
- Economic reporting for the head office
- System of Cost Accounting aiming at generating Monthly Profit & Loss for an analysis of profitability of Business Unit, Products and Channels
- System for a determination of Economic Budgets
From an operative view point, priority has been given to design and to the realization of modules for accounting, commercial and claims areas. Therefore, availability of data resulting from such patterns has enabled the realization of Management Reporting models.
Accounting Area
The first step in this area has been the definition of an Economic Reporting model for the Head Office. An analysis of business Accounts Plan, made together with staff involved in administration processes, and the individualization of the Accountability standards group's in terms of configuration of a monthly Profit & Loss, made it possible to identify the procedures to determine its main parts, particularly the Reserves, the Financial Management and the deferred updating sections, and consequently to obtain the monthly Profit & Loss for the Head Office.
The next phase started with the formulation of a Cost Accounting system aiming at getting analyses of profitability for Business Units. The structuring of this system started with the individualization of reclassifying models to be used for marginality analyses. In order to guarantee a better analysis of data, a number of reclassifying structures have been created, which the system can dynamically furnish. Moreover, the reference structure is represented by a Profit & Loss characterized by Contribution Margin, which is different from traditional configurations, following the need to show more than one Technical Margin and to consider financial managing within the results of typical activities. Next step has been the individualization of the main drivers to be used in the re-allocation processes subsequently designed. As is usual for Insurance Firms, managing structure costs has been particularly difficult, mainly because of the individualization of drivers capable of showing the real absorption of resources from the part of different business areas. The main system output has been a monthly Profit & Loss where it is possible to effect an analysis of margins generated by the single B.Us.
This system has been completed with the introduction of:
- a system of financial Key ratios;
- a model of sensitivity analysis for the main Profit & Loss Items;
- a system of simulation based on the results of an operational leverage
A complete system for the managing of staff costs has been also inserted within analytical accounting forms.
The introduction of specific modifications of turnover processes and the utilization of drivers have enabled the insertion in this system of a section for the analysis of profitability of Products and Distribution Channel, producing specific outputs for the Top Management and keys players of the commercial function.
The realization of an Economic Budget has been effected in the same way.
Commercial Area
A Commercial Reporting system has been formulated together with the design and realization of section forms of the Accounting Area.
The structure of this system needed the realization of various reports subdivided into four main reports (Titles Portfolio, Premium, Premium Earned, Cancellation), and of a residual area devoted to strategic analyses (maps for the positioning of products, analysis of distribution channels, etc.). Any area structure can supply extremely synthetic reports for every information (monthly, per range, type, title, geographical area...), to be used directly by the top management, from which it is possible to obtain more complex analysis in terms of more detailed dimensions (per customer, product, agency, starling, province/region...), to be used directly by the commercial staff. Therefore it is possible, within this form, to effect analysis of sales trends (analysis of historical series, of mix...), of the composition of titles portfolio, of new production, of the incidence of cancellations and commercial costs. Moreover, it is possible to manage the whole budgeting process and the insertion of sales targets, and to appraise their differences in comparison with resulting data.
The system has been completed with a model of electronic delivery of sales data and with a system for the generation of evaluation forms for sales places.
Damages Area
The model of damages data management has been subdivided into three main areas: Statistic Reporting of damages, Legal Managerial Reporting of damages and Reporting of Provision.
Damages Statistic Reporting area has been subdivided into a number of main sections (analysis of Business Units, of Products, etc.): each of them include analyses aiming at underlining historical trends of new denunciations, damages resolutions, reimbursements, and the present damages portfolio. It is also possible to monitor the average costs of damages reimbursements.
Legal Managerial Reporting section has been created in order to enable function and area managers to constantly monitor reimbursement process data. Within this model, each operator can dispose of analyses of the quantity of new denunciations, of possibility and quality of resolutions, and of payment management. It is also possible to examine the composition of damages portfolio following their typology (either judicial or extra-judicial) and their phase in the judicial process. Moreover, staff can dispose of a model for the analysis of service levels, focusing on the average time of damages resolutions, on the rapidity in entering information system and on the damages opening period. Every models of this system are set in order to supply data of any single performance and of any single claim. Details of any Section (Circulation, Private Life, Immovable Properties...) and Field (Damage Reimbursement to Things, Data Reimbursement to Persons), enable to go deeper into the above mentioned statistics at every information levels (new denunciations, average costs...).
Finally, within a Reserve Reporting area, the Controlling function can dispose of supporting reports for the calculation of Provision for Claims to be inserted within the business budget.
Management Areas
The completion of these models enabled the staff to dispose of a very important information patrimony. It was essential to dispose of such information within the Managing Reporting system, in order to support a decisional process from the part of the Top Management. For this reason, a Booklet has been conceived and realized, which presents almost 40 synthetic reports of data relative to the different areas of the reporting system. This Booklet is quickly and automatically produced, and available for monthly steering committees.
The final part of the project has also implied the planning of a Key Performance Indicators system, aiming at monitoring business performance on specific areas. This system, following the logic of Balance Scorecards, has been subdivided into 4 Perspectives and 14 KPI Areas inside, each of them containing a varying quantity of indicators.
Each indicator needs a target value, which is submitted to annual planning and constant monthly revisions within special committees of strategic direction. Comparison between targets and final values, or the utilization of algorithms based on historical series, activate a "system of evaluation scales" enabling to ponder each indicator's results, and supporting their impact on the total results, from single perspectives to the whole firm.