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FINANCIAL SERVICES

Target Operating Model

How insurance markets, legislation and technology are
speeding the need for an operating model review
KPMG ADVISORY

The challenge Your benefits KPMG approach Credentials Contact

The challenge Over the past decade, the insurance industry has had its share of disruptive
events: major booms and bursts in stocks and real estate markets, continuing
industry consolidation, a regulatory tsunami, the emergence of independent
distribution, and steady growth of the product portfolio, to name a few.
Meanwhile the operating model of insurance companies remained unchanged,
with following potential drawbacks:

• Sales organization inadequately adapted to latest changes in distribution

channel and product portfolio mix.
• Non-optimal operational processes for contract, claims and investment
administration departments.
• Risk and finance organization insufficiently adapted to the forthcoming
legislative requirements (Solvency II, IFRS 2).
• Inappropriate ICT architecture, insufficiently aligned to real business
needs.
To meet these challenges, consider transforming your operating model.

Increasing distribution
channel mix
Realignement of Increasing product
global economic portfolio mix
activities

Managing risk and Operating Continuing Industry

compliance (Solvency Il, model consolidation
IFRS, etc.)

Technological More competitive

evolutions business
Cost reduction environment

© 2010 KPMG Advisory, a Belgian civil CVBA/SCRL and a member firm of the KPMG network of independent member firms affiliated with KPMG
programmes
International Cooperative (“KPMG International”), a Swiss entity. All rights reserved. Printed in Belgium.
 Your benefits Operating model transformation can generate substantial business performance
improvements for the insurer, including:
• Greater market profit margins.
• Reduction of new product introduction time.
• Significant reduction in service costs per policy.
• Reduction in IT operating costs and customer service staffing.
KPMG approach KPMG’s Target Operating Model (TOM) service helps organizations in the
insurance industry successfully realise business strategy by constructing
optimal business architecture. It provides a framework for making decisions on
operational strategy such as what functions should be shared, how functions
should be configured in size and budget, and where operations should be
performed and by whom. The model itself is flexible, and can range from
simple, local model (e.g., a blueprint for a specific departmental change) to a
complex articulation (e.g., a major global transformation of an organization).
The TOM services covers all dimensions of the business that contribute to the
realization of a vision:
• Organization, geography and governance review.
• People and required skill sets.
• Business process and methodology review.
• Review of information systems and technology.
• Performance management through key performance indicators.
KPMG’s TOM service includes four phases:
1 Diagnose the current state operating model.
2 Define the desired future state target operating model, including
comparacing with the outcome with leading practices in the market and
with internal objectives of key stakeholders.
3 Perform a gap analysis. Define quick wins and midium-term action plans.
4 Manage the transition stage.
Credentials The Performance & Technology team at KPMG Advisory has built up solid
experience and proven methodology translating technical and practical
knowledge into successful Target Operating Model solutions which are
fully embedded, for a variety of national and international financial services,
insurance and asset management companies.
Our team has a good balance of insurance industry experience and business
performance improvement knowledge.
Contact Bart Walterus
Partner
KPMG Advisory
Tel. +32 2 708 38 80
E-mail: bwalterus1@kpmg.com