Posted: 26 Aug. 2019 03 min. read

Ready for the present?

IFRS17 Insurance

January 2022 seems a long way for an operational focus. Insurers in Australia, like their counterparts around the globe, do not necessarily have IFRS 17 as part of their “top of mind” activity. The reality is that the insurance industry has slowly, yet constantly evolved due to market changes, previous regulations (i.e. Solvency II in Europe and LAGIC in Australia), and the natural evolution of their business.

However, IFRS 17 is by far the biggest insurance change, on a global scale, in the last 20 years. It requires substantial effort and investment from the industry in terms of resources, data and systems’ strategy. This is without considering the main impact from a business standpoint on the balance sheet, income statement, disclosure and, generally, reporting area.

In a recent mini survey with Australian insurers we learned three key aspects of their current journey:

  1. Almost all have completed the ‘Impact assessment’ to understand how the accounting/actuarial policy changes will impact their financial, management and regulatory statements
  2. Most want to use IFRS 17 as an opportunity to transform or, at least, improve their current processes, data, systems and as a result, resources allocation as opposed to treating it as a ‘compliance exercise’.
  3. The majority focusing on the data and systems components in order to comply with the regulatory requirements

So, what is the best approach?

The Deloitte framework is simple, logical and effective. It is the synthesis of our growing portfolio of active IFRS 17 projects across the three key regions: the Americas, Asia-Pacific and Europe. It highlights the key pre, post and implementation phases in chronological order.

The Deloitte Framework

If we explore the above five phases, we realise that the market focus is around steps 2 and 3, depending on geographical area, size and type of organisation.

So, if we want to analyse those two steps further.

  1. Feasibility revolves around Deloitte’s feasibility program, which aims to facilitate and accelerate which technical solution system will better fit our ecosystem. Rather than focusing on the IT aspects, it is driven by a business angle that focuses on the current and, especially, future business processes that are to satisfy the regulatory requirement. Business processes will necessarily impact people, data and systems’ architecture.  
  2. Readiness typically results in activities such as vendor selection* and potentially Proof of Concept (PoC). The goal is to understand vendors’ capability as well as their project management skills with a  view to future implementation. With the right approach you can reduce costs and time for the coming readiness and implementation phases.

*The assumption made is that as per 95% of insurers require a sub-ledger to comply with the granularity of data requested by the regulator

Three years ago Deloitte established an ‘IFRS 17 task force’ of experts to cover all the key aspects of the five phases above: comprised of actuaries, technical accounts, finance transformation and systems & data experts to deliver a unique experience to our clients. The goal to be prepared to face every single aspect of this complex journey.

 

For more, please contact Kico Amata.

Meet our author

Kico Amata

Kico Amata

Director

Kico is a director leading the IFRS 17 campaign from a finance systems standpoint, supporting clients in making the right systems and architectural decisions. With over 20 years’ experience in delivering Finance Transformation Programs across France, Italy, the UK and now Australia.