Tailored IFRS 17 training is key

How can you bring your board and business teams up to speed?

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Upskilling for IFRS 17 has mainly focused on implementation teams in actuarial and finance. As the effective date moves closer, boards and business teams also need training to help them understand how the new accounting standard will affect their day-to-day decisions. How can you bring your key people up to speed?

Far from being just a technical exercise, IFRS 17 has significant business implications in areas ranging from pricing and product design to calculating the key performance indicators (KPIs) used by analysts and investors. 

Ensuring your board and business teams have the knowledge they need to deal with these implications is critical and calls for a step-up in IFRS 17 training and education across your organisation. 

It’s really important that you don't underestimate the breadth of knowledge required across your teams.

Need to know basis

Who needs training and when? Project teams have already undergone many hours of technical instruction, though you’ll likely need to invest in further training as your business continues its journey through IFRS 17 implementation.

The next wave of business-focused upskilling is likely to include a broader range of functions, such as your board, audit committee, underwriters, investor relations and internal audit - along with actuaries and finance professionals who’ve not been directly involved in preparing for IFRS 17.

This second wave of trainees don’t need to become technical experts by any means. Nor do they need chapter and verse on all the business implications. But they do need to understand the impact of IFRS 17 on the key decisions they make in their particular job as part of a tailored, targeted and proportionate approach to training. 

For example, IFRS 17 changes how profit is measured and released (contractual service margin). As a result, underwriting and product development teams may have to modify terms and conditions, or even re-design products altogether, to make sure they continue to deliver a return. It’s therefore important that these teams receive relevant training before they begin to make decisions on an IFRS 17-basis. For teams designing and pricing long-term contracts, that time is probably here already.

Similarly, board training would not only cover what they need to know to review and sign off a new and unfamiliar set of accounts, but also understand all the moving parts and how they affect the numbers. 

In a case in point, the more profit you release on a contract up-front, the higher the associated reserves. In determining the right balance between releasing profit and managing reserving levels, your board would need to judge how the two interact and how much of a market outlier they would be prepared to be. 

With comparative figures due at the beginning of 2022, training in how to make these judgements should ideally get under way in the next few months.

Training needs assessment

Carrying out a ‘training needs assessment’ will help to identify the most suitable format, level of detail and content for particular personnel.

People in specialist project teams will need training at every stage of implementation. Augmenting face-to-face instruction with self-led e-learning can help to deliver all the various information in a flexible and digestible way. 

For business teams, tailoring upskilling to the specifics of the role would not only help to focus time and resources more effectively, but also strengthen trainee engagement and attention. Half a day in total is probably the minimum a member of your board or frontline business teams need. However, this can be spaced out and delivered in a variety of formats according to preference.

Insurers that are only targeting minimum IFRS 17 compliance often ask us whether they could run a scaled-down training programme as a result. While there may be some reduction in technical demands, the training needed to understand the business implications is the same as any other insurer. And even if you intend to downplay the IFRS 17 numbers in favour of other metrics, the new standard still changes prominent KPIs such as adjusted operating profit (AOP).

Risks and opportunities

Effective training can be a value multiplier by helping your business teams to gain new insights from the IFRS 17 analysis and build this into a compelling investment story.

Skimping on training or leaving it too late could lead to unintended consequences. These stretch from marketing products that end up running at a loss to awkward questions from analysts if your business is an outlier in areas such as reserving. The even bigger risk is delayed filing or even re-statement if board-level judgements come under challenge.

A structured upskilling programme with a needs assessment as the foundation can help to bring your people up to speed, without deluging them with information or tying up any more time than is necessary.

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Graham Oswald

Graham Oswald

Director, PwC United Kingdom

Tel: +44 (0)7989 740744

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