The all-new IFRS 17 regulation is set to revolutionize accounting standards within the insurance industry. It will enable increased levels of intricacy, transparency, and comparability, providing analysts and investors with a deeper understanding of a company’s financial well-being than ever.
This shift is poised to have a conspicuous effect on financial statements and crucial performance metrics for the majority of insurers. Hence establishing the requisite IT infrastructure for this transition is imperative. This requires significant organizational overhaul to achieve substantial advantages while ensuring compliance. Irrespective of the route the insurers decide to undertake, there must be prompt strategies to enable each business fulfill its respective responsibilities.
A comprehensive approach integrating risk and finance analytics into a unified platform will foster enhanced cooperation among multiple stakeholders including actuaries, finance, risk and technology heads. Nektarios Constantino, Global Solution Lead for IFRS 17 said, “The core shift lies in how insurers recognize profit; instead of focusing on premium collections, it pivots towards how insurance services are rendered”. He also advocates for a phased approach to implementation. This strategy allows insurance companies to acclimatize their teams with the new standard and embrace an agile methodology for effective adaptation.” Hui Yee Ang, Asia Pacific Lead- IFRS 17 and Insurance Capital Management, SAS said, “The lack of comprehensive understanding can be supported by investing in knowledge and resources. Infact the key requirements can be summarized as first, a robust and mature solution that is proven working, transparent and flexible enough in meeting IFRS 17 requirements; secondly, think of the long term, look for a solution that is flexible to scale beyond IFRS 17 and ability in addressing other business requirements and thirdly, a vendor who can offer extensive implementation experience, specifically practical experiences which obtained from implementation projects which have gone live in 2023”. Since data forms a crucial element of the implementation part, early engagement with relevant teams are important for data identification and availability. “The emphasis must be on iterative approaches, given the complex nature of the projects. Not everything needs to be ready on day 1, we understand that some requirements will come in later stages and that is the advantage of developing projects in agile, where requirements can be discussed between the different stakeholders in different stages of the project,” said Rodolfo Ferreira, Principal Technical Consultant, Risk Incubation Team, SAS EMEA Asia Pacific. Experts feel, IFRS 17 should not merely be viewed as a regulatory hurdle but as an opportunity to develop new key performance indicators (KPIs) that drive strategic decisions within the insurance business. Hui urged insurers to integrate IFRS 17 seamlessly into their KPIs. “Understanding how this standard affects performance indicators is important in measuring its impact on the business” she added.
This implementation does need a well laid-out approach to address various challenges. Lee Hin Sze, Chief Financial Officer, Etiqa Insurance & Takaful Group suggests a high-level analysis to identify core system enhancements. Commenting on the challenges, Lee stated,” Through the whole journey it is very important to know and employ which set of consultants (IT, consultant for technical papers interpretation, actuarial software, accounting software, etc as well as ensuring we are able to pass External Auditor review) are very important. Hence the need to have good narrative about the project as well as close working relationship internally as well as with all the respective consultants to have alignment on moving forward the projects are very critical.”
“Crafting a persuasive narrative to engage stakeholders in this transition is vital,” he added. Thanos Agelopoulos, Chief Risk and Actuarial Officer, Ydrogios Insurance, Greece highlighted the need for adopting new processes and fostering a deeper understanding of IFRS 17 concepts among teams. He also highlighted that IFRS 17 can be a prompt for transformative change, particularly in the realm of finance. An opportunity to get better insights into our product profitability. An opportunity to automate. Working together with different departments with data from different sources and different systems on a timely manner needs automation. Otherwise, it can be a very time-consuming exercise and prone to errors. Look at this as an opportunity to “expose” some weaknesses in long standing processes. An Opportunity to improve the data quality.” Experts also emphasize on the importance of identifying focus areas early to minimize core system disruptions. Insurers must prepare, invest in knowledge, and foster collaboration among teams. A phased approach, coupled with an agile methodology can facilitate seamless transition.
The successful implementation of IFRS 17 requires a holistic approach that considers every facet of the business ecosystem. Insurers must adapt, evolve, and invest in the right technology solutions to thrive in this new regulatory era.
Summarizing some of the key highlights, Jitesh Khaitan, Head Risk Management, SAS India advised, that the time to start is now with soon approaching timelines of 2025 or 2026; don’t look at this as just a compliance program rather it will have transformational impact in the long run on insurance companies as well as look for local in-country support and a parametrizable IFRS17 solution with strong business content
(This story is a brand content initiative. The article is based on the webinar conducted by ETBFSI in association with SAS on IFRS 17.)
To watch the full episode, click below:
Part 1 : https://bfsi.economictimes.indiatimes.com/webinar/ifrs-17-waiting-is-not-an-option/2607
Part 2 : https://bfsi.economictimes.indiatimes.com/webinar/ifrs-17-travellers-journal/2646