In the insurance industry, it creates an amazing dollar. According to Aon, the sixth year of record, the insurance loss reached $ 145 billion in 2024. How does the balance sheet of the insurance company absorb all of them? Fortunately, risks are all of insurance.
“I know that large -scale catastrophic events will happen,” said Andrea Hecht, CSAA insurance group CFO. “Ready” can mean many insurance, but for the financial team, we plan to treat not only natural disasters but also economic changes such as sustainable inflation and long -term interest rates. It means standing.
In the CSAA Insurance Group, which is a car and a house owner -based insurance provider, Hecto's job does not cause the confusion in the company's financial performance in the CSAA insurance group based in Walnut Creek, California. That is.
In an interview, Hecto explained some of the best practices used to protect the company financially and decide which lever to draw when something unexpected happens.
How does CFO pivot the company's financial strategy when a major event occurs?
The important first step is to recognize the effects of events on major financial indicators. In the case of insurance companies, important events affect measures such as loss rates. [losses on claims relative to premiums earned] And surplus validation such as directly written premiums and valid policies and top line metrics [those active and providing coverage]。 From there, CFOs can make decisions based on information on the following steps, such as cost reduction and price declaration. [formal requests to adjust premiums] Alternatively, pause strategic investment until the organization's fiscal status is improved.
The executive leadership team needs to understand the potential results of the situation. If the main leaders are not in line with the next step, the strategy of the organization that shifts the results will inevitably fail.
Of course, not all important events are the same. There are two types. What you know is eventually happening and unexpected.
The first good example of the insurance industry is a large and catastrophic event. An unexpected event example is the high inflation period seen in the past 3-4 years. Again, CFO needs to adjust the appropriate business unit for the reaction of the reaction. In the reaction, it is necessary to block growth in the increase rate, underwriting risk options, or even more extreme examples.
What can CFO do to ensure the economic stability of the company throughout the year?
The Foundation is a comprehensive financial plan that is directly linked to strategic goals and reflects the current operational environment. However, business must be engaged in creating this financial plan. You need to take both top -down and bottom -up approaches.
In addition, during uncertainty, executive leadership needs to understand the range of possible results. In many cases, it is caused by implementing a scenario plan. For example, when inflation began to increase dramatically, we created multiple scenarios based on how long it will last. This helped understand which lever you need to pull.
It emphasizes capital to ensure financial stability in the event of a large -scale mountain fire, storm, or other catastrophe a year. The leader of the entire organization needs to interpret these test results and have financial insight to understand their output.
What are the innovations you have witnessed in financial professionals? How should CFO be adapted?
The biggest innovation that comes to mind is the use of generated AI. It can affect everything from customer exchange to fraud detection and prevention and financial results analysis. If you accept it completely, it can dramatically affect our daily work.
I think it's important that CFO supports companies to think about the responsible way to use this technology, and become wise from an economic point of view. AI is an area where you can invest a large amount, and it is the CFO job that guarantees that appropriate returns are generated.
Do you think the financial trend that was quiet in 2024 would explode in 2025?
Many insurance companies pivoted for cost reduction strategies as inflation continued in 2024. The market is starting to soften [more competition among insurers to underwrite personal and business risks]So, this year we are in the investment stage.
GEN AI can actually explode in 2025. We also hope that the Software-AS-ASASASASAS-AS-AS-BASED solution will continue the upward orbit. On -premises IT investment can be expensive to maintain and may be slow to respond to changes, but the cloud requires IT infrastructure and helps to be whimsical.
