Effective executive and financial management is critical to the success of an insurance company. The company’s executive management team (EMT), the team that executes critical organizational functions such as development and department processes, and monitors financial matters ensures these business objectives are met through strategic planning. One of the most important responsibilities for the EMT is the creation and execution of a strategic plan.
Undertaking Strategic Planning
Since coverage must be supported by policyholder surplus, the executive management team understands that capital is critical to the survival of the insurance company. With this fundamental principle in mind, the EMT undertakes strategic planning.
Are you participating in strategic planning, or do you want to learn more about it? Before jumping into the three critical concepts of strategic planning, here are some key questions the EMT should consider:
Key Strategic Planning Questions
- Will the company be a few steps closer to its vision by next year?
- Who will be the business process owner of the company?
- Does the company have a roadmap to get from today to what they envision tomorrow?
- Who is on the planning team?
- What will the company be like in the future?
Three Concepts Needed for Strategic Planning
In a highly regulated insurance business, where the products may vary only slightly, it is crucial for the company to have a clear strategic business plan that will effectively and efficiently deploy its resources to meet or exceed its goals.
Effective EMTs must understand the three concepts that lead to the creation of a strategic business plan: strategy, strategic plan, and strategic planning. Let’s examine them for clarification and differences.
Strategy
A thoughtful, deliberate plan of action.
Outlines the company’s direction in relation to what’s happening in a dynamic environment
Answers the question “How will we achieve our aim of creating and nurturing a successful insurance company?”
Strategic Planning
The process that is used to create the strategic plan. Includes an Enterprise Risk Management (ERM) analysis which determines risks and opportunities Includes a Strengths, Weaknesses, Opportunities, and Threats (SWOT) analysis that answers where the company is now, where it is going, and how it will get there.
Strategic Plan
The formulated roadmap describes how the company will execute its chosen strategy. Provides answers from initial SWOT. Includes values, vision, and mission statements.
The development of the strategic plan must start with a variety of information, such as organizational values, market trends, regulatory guidelines, competitive analysis, and risk appetite. Keep in mind that the planning process isn’t always linear. A single action may incorporate a variety of information, and many of these actions often occur at the same time.
