Issue/opportunity

A large national health insurer faced growing challenges in forecasting and managing nearly $1B in annual indirect cost allocations. Over time, the addition of new market segments and cost centers had created a highly complex and opaque allocation structure. Untangling allocation results for analysis was so time-consuming that meaningful forecasting at the line-of-business (LOB)level was largely abandoned—resulting in missed opportunities for corrective action and market agility. Leadership lacked confidence in forecasts, and segment leaders could not reconcile actuals against projections, undermining strategic decision-making.

Approach & outcomes

• Assessed the current-state indirect allocation process, chart of account design, and cost center structure
• Interviewed market segment owners to capture operational gaps, user pain points, and needs for visibility
• Identified business drivers that could reasonably replicate and forecast indirect allocations at the LOB level
• Simplified the allocation process by reducing the number of unique drivers and unnecessary complexity
• Exposed gaps in reporting alignment between FP&A and accounting, driving efforts to improve data consistency
• Delivered a flexible, transparent, driver-based forecasting model tailored to business realities
• Established a process to model the impacts of market segment changes against a stable allocation baseline
• Fostered cross-functional collaboration between accounting, FP&A, and market leadership to strengthen data governance and reporting alignment
• Improved forecasting accuracy by 15-20% at the line-of-business level, restoring leadership confidence in financial projections.
• Reduced forecasting cycle time by approximately 25%, allowing for more timely insights and decision-making.
• Increased transparency and traceability of indirect costs, improving accountability across segments.
• Enabled 5-7% improvement in budget utilization efficiency, as business units could proactively adjust spending based on reliable forecasts.