Activities should be trimmed and go deeper

As global competition intensifies, companies regard continuous operational streamlining as vital to their competitiveness. Financial management is also expected to engage in the continuous streamlining of functions. In many organizations, basic financial management has been outsourced and global service centers are proliferating in low labor-cost countries.

While streamlining their operations, financial functions are also being expected to make a deeper and more strategic contribution to supporting and developing business activities.

Financial management is digitalizing and automating

Digitalization has rapidly transformed business activities. It has created new types of service and business models as well as new, unprecedentedly effective methods and tools for value creation.

Digitalization has also transformed financial management functions and markedly reformed practices. The pace of change continues to increase. The proliferation of automation and software robotics has accelerated data management and greatly reduced the number of human errors. Digitalization is enhancing basic financial management functions and improving accuracy and quality. Work that is independent of time and place has made work processes more flexible.

Automation of the routine tasks will free up resources for the analysis and integration of data."

With some justification, the digitalization of financial management and automation of many basic tasks are a cause of concern among financial managers. They also offer financial management experts the opportunity to use their expertise to solve complex problems, thereby generating more value for businesses. Wherever the automation of financial management reduces the human input needed in routine tasks, it will free up resources for the analysis and integration of data, while enabling a genuine focus on supporting business operations and evaluating new commercial opportunities.

However, the pressure is also mounting to develop the skills and competencies needed to succeed in this new role. Automation is leading to major changes in the job descriptions and skills required of financial managers and professionals. A new way of thinking and openness to adopting new types of work and changing practices are needed. Both organizations and individuals are responsible for developing processes and know-how to meet the growing expectations directed towards an organization's financial management.

New competence requirements for financial management

As the role of financial management changes, job descriptions and skills requirements are being transformed. A key skill is the ability to understand the relationship between financial performance and the performance of various business functions. In turn, this requires closer cooperation between financial management and other business units, in which the financial management expert primarily supports decision-making and operational management. No longer a mere producer of reports and data masses for decision-makers, the financial function is an active user and interpreter of information. The focus is shifting towards the perception and analysis of future opportunities instead of reporting historical data.

The focus is shifting towards the perception and analysis of future opportunities instead of reporting historical data."

A growing number of international rules and regulations are arising with respect to financial management and financing. Financial experts must be able to upgrade their skills and knowledge of topical issues concerning matters such as taxation, transfer pricing and international accounting standards.

While the perception and management of financial risks involve the mastery of regulations and international legislation, other business risks and their management are receiving greater emphasis in the everyday work of financial and financing experts. To prevent unpleasant surprises, in addition to identifying business opportunities financial management needs to spot potential risks and uncertainties that may disrupt business activities. This requires skill upgrades, the active following of trends and the monitoring of international economic cycles and political developments.

Deeper insight is needed into the hidden causes and effects behind financial figures, as well as the formation of phenomena such as customer value."

As the role of the financial function becomes more strategic, financial management and experts will need deeper business know-how and a broader vision of commercial success factors. Numerical skills are no longer sufficient - deeper insight is needed into the hidden causes and effects behind financial figures, as well as the formation of phenomena such as customer value.   

As the role of financial experts changes, cooperation, interaction and communications skills, and tools for shaping opinions, are growing in importance. Financial experts need to collaborate with other departments and colleagues in gathering and analyzing the relevant data from multiple sources. The ability to distinguish essential information from the data mass, summarize it and present it intuitively and persuasively to management and colleagues is taking center stage.

The financial function is an internal service provider with the task of promoting and supporting the success of an enterprise. In addition, outstanding service-mindedness will be increasingly required from the financial professionals of the future.

In Finland, these kinds of interested parties include, among others, the Finnish Motor Insurers’ Center, the Finnish Workers’ Compensation Center, and the Finnish Center for Pensions. Examples of statutory insurance include earnings-related pension insurance, industrial accident and occupational diseases insurance, motor liability insurance, medical malpractice insurance and environmental liability insurance. Voluntary insurance products include property insurance (such as home insurance and contents insurance), pet insurance, car insurance (comprehensive motor vehicle insurance), liability insurance, legal expenses insurance, business interruption insurance and voluntary personal insurance policies such as life insurance, health insurance and accident insurance.  

Voluntary insurance policies are typically designed for households and businesses, but they also have ties to social security. Many voluntary personal insurance products are complementary to social security. One good example is life insurance, which adds an extra layer of protection to the statutory group life cover that employers have to take out for their staff. Another are private pensions, which supplement the state pension scheme. Insurance is an important risk management tool for both individuals and businesses. Payment protection insurance, for example, covers the policyholder’s monthly debt repayments if they are unable to work. 

Insurance Claim Handling 

When a risk materializes and a loss is incurred, it is time to claim on the relevant insurance policy. It is up to the claimant to prove that the loss satisfies the terms of the policy document. In the insurance sector, customer experience is ultimately all about the efficiency of claims handling. It is at this point of the contractual relationship that the insurer has to deliver on its promises to the customer. Handling personal injury and property damage claims and deciding each claimant’s fate requires a special kind of customer service expertise. Informative, customer-oriented responses to property damage or operational insurance claims can only be achieved through teamwork, and claims handlers need to be able to work seamlessly with a variety of other professionals such as lawyers, engineers, fire inspectors, and car mechanics.

Personal injury claims handlers need to consult with not only lawyers but also medical insurance experts and practicing medical professionals. Aalto EE is the only educational institution in Finland that runs medical seminars for insurance professionals. The seminars provide insights into medicine and law and an opportunity for insurance professionals to broaden their claims-handling competence. Our seminars have so far been attended by more than 800 insurance professionals, and our events have given them unbiased medical and legal insight to help them in their claims-handling work. This insight is now allowing them to deliver on the promises made throughout the life cycle of each claimant’s policy. The ability to make the right decisions quickly is especially important in the context of personal injury claims, which can otherwise lead to considerable extra expenses and untold damage to the customer relationship. 

Knowing whether to award or deny a claim is naturally vital, but of almost equal significance is the way in which the decision is communicated to the claimant. Both verbal and written interaction skills are crucial and require continuous practice. Competently written responses to claims are an important vehicle for communicating with policyholders and building a stronger relationship with customers. A well-reasoned decision is likely to gain the claimant’s trust and discourage complaining. Understanding how to explain reasons is a critical skill of claims handlers, regardless of whether the decision is to award or deny a claim. 

The awarding of compensation is governed by the Finnish Tort Liability Act (412/1974). The Tort Liability Act is a law of general application and does not extend to contractual liability or liability based on special laws. From the perspective of insurance claims, however, the Tort Liability Act is one of the most important laws in Finland. As well as the law, insurance companies also have to observe judicial precedents set in connection with previous cases, the applicable insurance contracts and policies as well as the industry code of ethics.

Insurance Law

It is important for insurance professionals to be aware of upcoming regulatory reforms and to understand the multi-tiered preparatory framework of EU-level regulation. They also need to be familiar with past laws and regulations.

The laws governing insurance companies in Finland were comprehensively rewritten in 2008, and the rules have changed again with the national implementation of the European Solvency II Directive in 2016. A new national law governing the provision of insurance services entered into force in 2018, which is based on the European Insurance Distribution Directive (IDD). The new law harmonizes the regulation of insurance provision through different channels and introduces more detailed rules for the protection of policyholders. Finland’s data protection laws were reformed with the adoption of the EU’s General Data Protection Regulation in 2018.

Those working in the field of insurance should also be familiar with FINE’s regulations concerning insurance and financial advice and the operation of the Insurance Complaints Board, as well as previous rulings of the Insurance Complaints Board and competent courts of law on issues such as insurance companies’ disclosure obligations and policies on granting insurance and making changes to insurance terms and conditions. Moreover, insurance professionals need to know about any EU-level regulatory drafting processes relating to non-life insurance, life insurance and employees’ pension insurance providers and how these will be transposed into national law. Insurance professionals should be able to use this framework to understand how regulation is likely to affect the products and services offered by their organization.  

Aalto EE believes in training professionals well in advance of regulatory changes. We are also hoping to put together a forum of those who attend our courses, to allow professionals to share their thoughts on the challenges and opportunities that the new laws and regulations will bring to the industry. Aalto EE also publishes textbooks and online courses providing useful information for insurance professionals.  

Maintaining Know-How 

The insurance sector plays an important role in ensuring the functioning of society. It is crucial for insurance professionals to always have the latest knowledge and skills to respond to changes in society, the nature of work, and the range of insurance products on the market. 

A recent report by Finance Finland identifies the development of well-being at work and performance monitoring as well as the ability of businesses to adopt new technology by means of either partnership or outsourcing as the most important themes in the world of insurance at the moment. Digitalization plays a major role in improving productivity in the insurance sector. The intangible nature of insurance makes these products very easy to digitize. Although a lot of the work of insurance professionals has become automated, there is still demand for the human touch in the industry; in fact, there are now more tasks that require creativity, social interaction, motivation, and teaching. New ways of thinking are needed to build productivity through the combination of human capital and information technology in digital processes.

Changes in consumer behaviors, the climate crisis, sociocultural evolution, and the challenges facing the global economy are all likely to lead to the introduction of new insurance products and services and transform the very concept of insurance. Maintaining competence and continuous learning are vital in a highly regulated industry such as the insurance sector. One way to ensure the competence of your insurance representatives and compliance with the laws governing the provision of insurance services and the IDD is to take advantage of Aalto EE’s extensive range of online training courses.

Future of the Insurance Industry

Keeping up with the transformation of the insurance industry requires foresight and a forward-thinking attitude. Consumer behaviors are changing, as are consumers’ reasons for taking out insurance for themselves or their property; the insurance industry must respond by coming up with innovations that appeal to the new market. 

Emerging scenarios can be detected by looking out for weak signals, and insurance professionals can also take a proactive role in reshaping the industry. The insurance landscape of tomorrow is challenging the industry to get creative. Insurance professionals also need to keep a keen eye on the global economy and learn to pick out the fragments of information that are relevant to their industry. Understanding the effect of global phenomena on the insurance sector and finding ways to ensure a prosperous future is vital. Thinking ahead makes it possible to identify new business opportunities and boost the performance of existing processes.  

Aalto EE’s Dominance in the Insurance Sector

We are masters of the intricacies of insurance and insurance claims. Aalto EE and the organization formerly known as Finva Finance and Insurance Education have been providing training in this field for more than 50 years. We work in close cooperation with all kinds of insurance organizations, legislators, and insurance lobbyists. This kind of stakeholder engagement ensures that our training courses are not only up to date but also provide a sneak peek into the future. We also use our contacts to look for the best way to take this ever-evolving yet highly regulated industry into the future. Aalto University’s instructors have a strong background in research, and their competence combined with the best practices of the financial sector guarantees an extremely high standard of education in our courses.  

Our Solutions 

While solid competence in insurance and claims handling is our priority, we strive to provide training in as many different formats as possible. Aalto EE’s training solutions for insurance and claims handling professionals range from half-day training courses to two-day seminars and multiannual degree programs leading to prestigious professional qualifications, namely the Diploma in Insurance and the Advanced Insurance Examination. Our approach to training is based on combining solid insurance expertise and experience with the latest research and best practices in the field. In addition to classroom-based and online training programs, organizations can enroll their entire staff in an online course to keep them up to date on the latest developments and demonstrate their competence.  

We believe firmly in learning from the experiences of others not only in the insurance industry but also in other sectors. Our familiarity with the global insurance market and close ties to the academic community gives us access to the latest know-how and useful contacts with industry influencers, top experts, and competent authorities. Our seminars, online courses, and training programs can also be customized to meet your unique needs, or we can build a solution just for your organization.