How ready is your business?
Implementation is already well-advanced in most large international companies. However, the bulk of small and medium-size insurers have yet to get beyond the starting line. Some may have consigned IFRS 17 to the ‘too difficult pile’ in the hope that it won’t happen. Others may have assumed that the delay in the go-live date until 1 January 2023 means that preparations can be put on hold.
2023 seems like a long way off. But our experience of working on numerous IFRS 17 assignments tells us that it takes at least 18 months to get from start to finish in a reasonably systematic way. Even if you’re only targeting the barest minimum compliance, this is the kind of timeline you would need to allow.
There may still be a temptation to leave it all to the last minute. However, this could create needless cost and upheaval such as trying to bring in outside resources to help make up for lost time, which will inevitably be in short supply as the deadline closes in.
Moreover, upgrading systems is only part of the ask. It’s also important to allow enough time to road test and review the outputs. The pressure on time is heightened by the likelihood that analysts and investors will want to know how the IFRS 17 results compare to the old numbers well ahead of 2023.
Beyond easing the risks, there are plenty of benefits in getting up and running now. You will have more time to create an efficient platform for ongoing reporting and work out how to derive business value from the extensive IFRS 17 demands. You will also have more time to consider how you can use IFRS 17 to tell a clearer, more comparable and more compelling story about your business.
Countless column inches have been devoted to the technical intricacies of IFRS 17. But two headline challenges stand out:
IFRS 17 brings in a novel and complex way of measuring returns – the ‘contractual service margin’ (CSM). To calculate it, you’ll need to collate, clean and store vast amounts of granular new data. Some of this data may be buried in your business somewhere, but where? For other data, you’ll need to start from scratch.
The new accounting standard is how the markets will judge you and compare you to your competitors. How will you come across under the new reporting? What changes in the make-up of your business could improve this? What alternative measures might you focus on instead? These are all questions you need to be thinking about now.
One of the big benefits of doing so much work in this area is that we’ve seen almost all of the issues that are likely to come up - and worked out ways to overcome them. We work globally so can often apply solutions developed in one market to others, where appropriate. From our experience, the key priorities for getting preparations on track are...
Data, data, data
Don’t underestimate the data demands. Sit down early to determine what you need, where it is and how to get it. Think about how to pull all the data together and store it in the most efficient way.
More than ever, finance and actuarial teams need to work together. The more each understands about the demands facing the other, the more they can smooth the overall process.
Know what you want
The demands are huge and the opportunities for finance transformation are there for the taking. But you may decide a managed service or a one-stop solution is for you. Decide which path you want to take and put the steps in place to make it happen.
Align with other projects
If you have finance and actuarial transformation projects under way. Think about how you can draw on these developments and integrate IFRS 17 into them.
Fast-track your projects
There are a number of firms out there (including ours!), who have solved most of the issues you will face. Don’t try and do it alone.
We recognise that every business has different aspirations and is at different stages of the journey. So, whatever you want from IFRS 17 and wherever you are now, we can help you face IFRS 17 with confidence.
Drawing on our experience of multiple IFRS 17 assignments, we know the possibilities, know the potential pitfalls and know what works.
We cut through the complex technicalities to help you understand the most pressing operational and investors relations implications for your particular business.
We can help you weigh up the cost-benefits of the various compliance, compliance plus and transformational options, gauge the necessary investment and timelines, and match aspirations with a pragmatic roadmap for delivery that ensures you’re ready in good time.
We can also help you simplify and accelerate implementation and overcome unforeseen demands and roadblocks to implementation.