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06 April 2021 | 3-minute read
From Gross Premium Written to Net Premium Earned, from Combined Ratios to IBNRs, the world of insurance has more than its fair share of technical financial jargon. But what does it all mean?
Anyone working in the world of insurance knows the technical nature of the work to be completed, and the need to understand the operational drivers of each area of the business. And in a similar fashion, the financial drivers of an insurance company are very different to those of a retailer or manufacturer.
From being able to discuss the financial performance of their own company or those of their competitors, to being able to actively contribute to the conversations about the financial strategic direction of the organisation - getting a grip on essentials of insurance finance is a skill that will benefit everyone.
I have sat in on the presentation of company performance by the board to the rest of the company, I have discussed quarterly reports on the website with team leaders and I have examined the financial results of insurance companies with various senior leadership teams. The fact remains that those who are ‘close’ to the numbers end up speaking a language that is alien to most others – whether inside the business or outside. Whether they are discussing the COR or GPW, releasing reserves or just ‘net net’, those not in the know are usually left behind.
Learning the language of finance – particularly in an industry such as insurance, is an essential skill to have to be able to progress. I remember spending time with the Head of the Legal team, who sat on the board of one insurance company, who confided in me. “I simply have no idea what they are talking about” he said. “By the time I have actually found the numbers to which they are referring, we are usually on to the next page. I don’t even have time to work out what questions I should be asking!”
I am delighted to be partnering with the LMA to deliver several new programmes being delivered virtually as part of the Finance Academy.
To find out more about the Finance Academy or to book a place on the next course, please visit the Virtual Academy website.
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