Self-build or multi-vendor: the challenges of IFRS 17 technology

Blog snapshot:

  • No single technology vendor has an end-to-end solution so a multi-vendor approach or self-build will be needed.
  • IFRS 17 presents an opportunity to kick start more radical change to insurance technology.
  • Get in contact for details of our New York, Toronto, Zurich, Hong Kong, Tokyo or Amsterdam events.


We recently kicked off our first in a series of IFRS 17 Technology Showcase events that are taking place over the coming months. These events will help insurers navigate the scale of the change needed for data and IT systems to comply with IFRS 17, the insurance contracts standard, and to better understand the technology vendors in the market.


Which approach to take?

From minimum spend approaches focused on contractual service margin (CSM) and chart of account changes, to point investments that address legacy technology issues and through to full modernisation initiatives, it is clear that technology is a cornerstone of every IFRS 17 project. At this point in time, many insurers are looking to make rapid progress while keeping their technology options open. They are making efforts to avoid throwaway solutions by adopting agile approaches such as internal prototyping and/or running vendor supported proofs of concept.

Whatever the final technology selected, it is clear that an immediate focus needs to be on understanding how technical decisions will impact on people, process, data, controls and, of course, technology. IFRS 17 is a very complex standard and, being principles based, it is subject to interpretation. So a successful approach will get the technical, operational and change teams collaborating and working at pace to an agreed roadmap.

In many cases planning activities have identified key person dependencies in 2018/19. This is leading to innovative use of technologies such as robot process automation, cloud and data marts (the access layer of the data warehouse environment that is used to get data out to users) to automate manual processes, accelerate actuarial run times and improve access to data in order to create greater capacity. Technology is enabling compliance. However these approaches are not suitable for everyone.


Tackling the technology challenge

All of the insurance company panellists we hosted have already started to tackle the technology challenge, in many cases using a “soft design” approach supported by a mix of prototype and proof of concept activities. In parallel, the panelists are also assessing where they can reuse the data and systems they developed under Solvency II (for more detail on this download our guide to using your investment in Solvency II to implement IFRS 17). One panellist said they have found a number of opportunities for reuse but interestingly described IFRS 17 as a film whereas Solvency II is more of a picture… they are the same in some ways but also very different.

From our own analysis and the panellists’ comments it is clear that no single vendor has covered the entire spectrum of what’s needed – from consolidation and reporting to actuarial solutions, CSM calculation and data storage. One panellist, who is planning to have systems live by year-end 2018, indicated they had to embark on an in-house development to address specific components of IFRS 17 where vendor solutions were not yet mature. Again, regardless of the buy or build approach, all the panellists agreed that a multi-vendor approach is needed to cover the end-to-end requirements.


Plenty of opportunity

Panellists discussed the opportunities that IFRS 17 brings. At bare minimum these included common data definitions and better control. But IFRS 17 also gives the chance for insurers to standardise and integrate systems, improve management information and the opportunity to build a global end-to-end process that accelerates the close whilst allowing for better intra-group comparisons.


Start now

The key to complying with IFRS 17 lies in defining processes that establish close working relationships between finance, actuarial and tax, embedding flexibility to allow the business to respond to the unexpected and providing early access to data to allow leadership teams enough time to understand performance and navigate the business. Specifically on data, insurance companies really need to understand their unit of account but, more widely, need to understand what information they need for IFRS 17 reporting, management information and business planning.

The whole of the technology landscape within an insurance company is impacted under IFRS 17 – the scale of the change needed is significant. Successfully navigating the technology change is further compounded by the different stages of readiness within the vendor community and constantly evolving capabilities. Setting a target state and understanding how IFRS 17 can help move your organisation towards that target is critical. Some insurers are using IFRS 17 as an opportunity to make more radical changes within their organisations such as dealing with other wider issues e.g. rationalising legacy IT systems from prior acquisitions whereas others are leveraging IFRS 17 to deliver incremental benefit.

One thing that all present were agreed on though was the need to start now. If you don’t act now you risk being overstretched in 2019 when leadership teams will expect early access to the numbers and while the business is performing dry runs….and especially in 2020 when further Solvency II acceleration is required and IFRS 17 comparative reporting comes into effect.

Global Tech Showcase events

If you’d like to learn more from us and IFRS 17 technology vendors at an event near you, please join us at one of our Technology Showcases taking place in New York, Toronto, Zurich, Hong Kong, Tokyo and Amsterdam over the coming months. Get in touch with Stuart Low ([email protected]) for details.



Richard Hart | Director - IFRS 17 Technology
Profile | Email | +44 (0)7881 736872


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