Sixty-five percent of Chief financial officers (CFOs) from large to midsize life insurance companies feel that their financial modeling results could use improvement.
The finding comes on the heels of a Towers Watson survey that examined varying aspects of financial modeling for life insurers.
The survey, part of Towers Watson’s Life Insurance CFO program, which strives to provide applicable research on trends and issues that are of importance to the North American Life insurance industry, focused on the effectiveness of financial modeling in terms of model governance and business priorities as well as the actual manner in which life insurers utilize financial modeling.
Financial modeling, in some crude form has been used for ages, from abstract hypothesis to the clear-cut contours of quantitative finance applications. With so many CFOs reporting that their financial modeling practices could use improvement, could there be a need for financial models of financial models?
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It should be noted, that when dealing with anticipated variables and hypotheses, complete accuracy, by its nature, will always be elusive.
Timeliness appeared to be one of the main issues — only 13 percent said that they were extremely satisfied with the timeliness of their models results while 17 percent reported that they were not at all satisfied. Ninety-one percent of CFOs surveyed reported that they were uneasy with the amount of time required to interpret model results before their teams could actually begin implementing the information yielded by the models.