Managing your costs for profit

Organisations that can align costs as well as revenues to their economic capital models will have a distinct advantage in increasingly competitive and difficult markets, says Geoff Booth, financial services practice director for Parson Consulting.

As insurance companies begin the detailed implementation of Solvency II in earnest, perhaps the biggest challenge is to leverage real, tangible business benefits. Much can be learned by studying the experiences of the banking sector with Basel II. In the banking community, significant enhancements to economic capital models have been developed on the back of Basel II. However, one area that remains neglected across the financial services community is the breakdown and allocation of the cost structure. Gaining real insight and analysis can offer considerable competitive advantage. Improving cost information will enable you to make fact-based decisions that will impact bottom line performance.