Insurers can cut their finance operational costs by 30% and reduce risk by redesigning how their finance systems work, according to a new KPMG report.

Paul Bishop and Gary Reader of KPMG UK say insurance is being hit by a “tsunami of change” involving different business models, more detailed information requirements, faster reporting, greater transparency and technology.

The report, Frontiers in Finance, says new regulations are driving a need for speedier reporting and increased accountability, but industry consolidation and restructuring have increased the complexity of many firms, making it more difficult to provide the information required.

The authors say insurers’ finance functions will have to deliver more with less, but current IT systems are complex and require significant manual intervention.

Companies will have to ensure that changes to systems, processes and people are not just about compliance, but also optimise costs and give firms a competitive advantage.

Before upgrading data, systems and processes, insurers need to consider what capabilities they need and break down silos within their organisations.

“People will have to change, learn to work as part of a team and have confidence in the figures the new systems provide,” the report says.

It says the investment in new systems will reduce operational costs and enable firms to reduce reserves by cutting operational risk.

“But arguably the biggest benefit is mitigating the risk associated with poor financial information, both internally and externally.”