Samsung Life Insurance leads the way in achieving IFRS 17 compliance
Establishing success in IFRS 17 implementation through collaboration between Deloitte Networks
On 20 March 2020 the majority of insurers felt a sense of relief on hearing that the IASB had postponed the effective date of IFRS 17 to 2023. At Samsung Life, Korea's leading life insurer, an IFRS 17 related announcement also brought a sense of relief that day, however in their case it was confirmation they had just produced their first set of IFRS 17 monthly reporting. In doing so they became the one of the first major insurers globally to have successfully implemented the most significant, regulatory driven, finance transformation to have hit the Insurance industry. For Samsung Life this represented a major milestone on an IFRS journey they began back in 2013 and on which Deloitte has provided close support through both its local expertise as well as the knowledge, expertise and know-hows from many different member firms around the world
Why is IFRS 17 so important to Samsung Life and the Korean insurance industry?
The major obstacle faced by Korean insurers, including Samsung Life, was the lack of experiences in fair valuation of insurance contracts. However, “in the midst of every challenge lies great opportunity” Instead of waiting the standards to be shaped by other insurers, Samsung Life took the initiative to help develop the standards through participation in the field tests carried out by the International Accounting Standards Board (IASB). These field tests served to establish the IFRS 17 framework and through their effective participation Samsung Life not only helped shape the standard but accelerated their understanding and thinking in terms of developing a solution. At the same time Deloitte Korea, the market leader of IFRS 17 in Korea, played a key role in supporting and guiding Samsung Life through these important early activities
How did Samsung Life achieve this?
Recognising the important implications that IFRS 17 would have upon financial reporting within the industry and in Korea in particular, Samsung Life took a conscious decision early on to use this as an opportunity to redesign their financial reporting processes. This resulted in the development of a solution comprised of 3 core elements:
- a new insurance liability management system incorporating assumption management, cash flow management, and a liability movement analyser;
- a SAP-based financial closing system that provided financial statements, management accounting and investment accounting,
- a data-management solution to utilize the huge amount of data in various ways.
The solution not only delivers financial reporting but also informs and enhances their risk management and product development processes
Samsung Life Insurance plans to start operating IFRS 17 in business performance analysis and business strategy development prior to its official adoption
Takeaways from Samsung’s experiences
The primary consideration is how to get the three very different and separate functions of Actuarial, Finance Accounting and IT to come together, understand each other and effectively collaborate to design, develop and implement a solution. For Samsung Life the pro-active and sustained support from leadership to promote cross-functional communications was a key factor.
Talent management is also a key for successful IFRS 17 implementation. The market demand for IFRS 17 experts for exceeds the supply. Samsung Life addressed this by investing time and money in developing appropriate talent development strategies.
But most importantly, Samsung Life emphasized the value of leadership commitment to defining & then driving / enabling the delivery of the desired change. New business practices will always face a degree of opposition from within, often because their teams are simply comfortable & familiar with existing practices. This is where leadership's willingness to tackle challenges and actively embrace new business practices is fundamental to enabling its teams to do likewise
What lies ahead?
With IFRS 17 successfully implemented, Samsung Life will be the first major insurer to run business on IFRS 17 system, and will start accumulating operational knowledge and know-hows before anybody else. This, of course, may lead Samsung Life to greater performances and higher competitiveness.
Meanwhile, other insurers may consult with Samsung Life in implementing and operating IFRS 17 in their own firms. Samsung Life Insurance as said that it will help other Korean insurance companies in their effort to implement IFRS 17 to align itself with the government policies.