How can you secure payback on your investment?
IFRS 17 will push reporting systems to the limit. Yet it could also be the springboard for a transformation in how you drive value from data across your business.
How can your business make the most of this investment, not only to boost finance capabilities, but also sharpen insights across the key competitive differentiators of customer insight and experience?
IFRS 17 ushers in new demands on data and systems and the need to collate, clean and store vast amounts of granular data.
Implementation is hard enough, even if you were starting with a blank sheet. But for many, the difficulties are compounded by a patchwork of siloed legacy systems, manual reconciliations and quick fix workarounds. Multiple mergers and limited integration activity mean that systems often don’t talk to each other. A lot of the infrastructure and processes have also been built up in response to incoming regulations including Solvency II and the General Data Protection Regulation (GDPR). The opportunities to increase business insight have generally taken a back seat to the need to comply on time.
In the past, it’s been possible to resolve some of the issues through tactical solutions such as data warehouses and data consolidation solutions to bring all the disparate data feeds together or putting in platforms to help all the systems communicate.
But if there’s one thing we’ve learned from all our work in this area, it’s that IFRS 17 requires much more than a ‘make do and mend’ approach.
The data and systems foundations of an IFRS 17 implementation could pave the way for transformational finance capabilities. These range from ultra-fast close to monitoring performance and productivity in real-time.
Complying with IFRS 17 and other regulations would be faster, less labour-intensive and cheaper in the long-run. Your finance team would also be able to measure productivity, assess new opportunities and judge the most profitable lines of business with greater speed, accuracy and insight. The COVID-19 pandemic has underlined the value of this kind of timely, accurate and actionable data.
Even bigger possibilities open up when this data transformation is applied to the business frontline. At present, interaction with policyholders is largely confined to the occasional and rarely welcome necessities of renewals and claims. It’s the equivalent of someone coming around to collect the rent or fix a leaking pipe every once in a while.
What if you could use all the data brought together for IFRS 17 to create a closer, more informed and more valued customer relationship? Rather than fencing data collection and management within the functional silos of finance, underwriting, claims and policy administration, you could create a holistic framework focused on customer insight, experience and need.
These richer streams of data could also come together with innovations in areas such as wearables and equipment sensors to create always-on customer engagement, pay-as-you-use cover and proactive risk prevention.
Bringing this data alongside existing internal reference data across actuarial, pricing and claims against perils and sub perils into one suite of analytics would drive significant insight.
This might all seem far-off if you’re struggling to keep the lights on across your legacy infrastructure. But front-runners are already bringing this customer-led data and systems transformation on stream in what could be a ‘Netflix moment’ for the insurance industry. Slower moving competitors risk being left behind.
How can your business use IFRS 17 as the data accelerator? As we explore in IFRS 17: Managing data to optimise cloud strategy, there’s no magic one-size-fits-all solution. Rather it’s important to follow a structured approach - one that is focused on data quality, usage and management with the necessary systems architecture in place to drive value for your business.
Organisations that are doing this well are looking to converge efforts around data under one single strategy.
The work that is needed over IFRS 17 related data - its quality, the storage of it etc - is significant. Undertaking this work in the context of a wider data strategy that is also applied to customer data and pricing data, to name just two examples, is key.
Doing this once, using one approach is important to ensure all data sets can contribute to an organisation moving data from being a headache into a valuable asset.
Some are planning on taking this one step further, with the aspiration of being a data led Insurer.
Using this joined up approach to understand the customer, further develop products that make them more relevant to the customer and enhance pricing decisions.
If you haven’t already, IFRS 17 is an ideal juncture to move your data over to a versatile software-as-a-service (SaaS) cloud platform.
Cloud solutions offer a fast, efficient and cost-effective way to jettison the legacy deadweight. You only pay for the capacity you need. As you look to sharpen insights and enhance customer experience, you would also be able to handle much more data in a more connected and communicable way.
Within finance, IFRS 17 is likely to demand a step-up in process automation. The advantages not only include more speed at lower cost, but also the chance to free up professionals’ time to focus on providing business analysis and insight.
The final piece of the jigsaw is how all the data and analysis link together.
The connectivity of cloud technology can help here, allowing you to move away from rigid planning and functional demarcation towards real-time customer focus.
IFRS 17 will require significant investment in technology. Rather than seeing this as a distraction you could do without, taking the opportunity now to regear your data and systems strategy could not only ease the transition, but also deliver significant commercial benefits. With the right vision and planning, this finance transformation can drive innovation and differentiation across your entire business.