IFRS 17 Global Roundup: February 2020

11 February 2020

PwC’s 23rd CEO Survey has revealed the issues insurance CEOs are most concerned about: over-regulation, cyber threats and speed of technological change.

Other findings show just 32% of insurance CEOs globally feel very confident in their 12-month growth prospects (down from 41% last year), while only 13% have made significant progress in establishing an upskilling programme. And unlike other sectors dealing with similar issues, insurers have the additional challenge of IFRS 17 compliance on the horizon.

Emerging threats. The need to upskill. Growth challenges. These are all reasons why your IFRS 17 programme should deliver more than a new set of financial accounts.

This month, I reflect on three ways your IFRS 17 programme can help your organisation navigate the issues highlighted in our CEO survey.

Turn up the dial on data and digital transformation
We’re seeing insurers using IFRS 17 as a business case to fund data and digital transformation plans. From looking across PwC’s IFRS 17 delivery programmes, there are three clear opportunities:

1. Modernise your data integrations into financial systems
IFRS 17 requires significantly more granular data for the disclosures and financial statements and, therefore, will increase the effort required if largely manual integration processes stay the same. Most insurers include automation of their integration into the general ledger and consolidation systems in the scope of their IFRS 17 programmes. Moreover, a significant number of insurers upgrade the related data integration platforms replacing old legacy point-to-point interfaces and ETL layers (extract, transform, load) with newer solutions.

2. Update or replace actuarial calculation engines and reporting platforms
With IFRS 17 there is a significant increase in actuarial input into the disclosures. Under IFRS 4, the key metrics are best estimate liability (BEL) and insurance incurred but not reported (IBNR). Under IFRS 17, actuaries need to calculate detailed discounted and undiscounted cash flows including risk adjustments and contractual service margin (CSM) at the unit of account level. The analysis and validation of the more granular actuarial cash flows put pressure against an already tight working day timetable and, therefore, the ones who will invest in more modern actuarial reporting platforms and automated processes will have better chances of hitting those critical days at month/quarter/year end.

3. Instill better information governance at group level
Although Solvency II set the basis for corporate-wide information governance in many parts of the world, a number of insurers ended up with departmental processes. IFRS 17 applies and increases focus on group consolidated data and disclosures, and therefore it's an opportunity to streamline and standardise information governance across all departments or legal entities within the group.

Upskill your workforce and change your ways of working
This month, we relaunched our market leading IFRS 17 training portal and a blog post from my colleague Graham Oswald explains how stakeholders across the organisation would benefit from IFRS 17 technical upskilling.

We’re also seeing our programmes upskill organisations on more topics than IFRS 17. For example, one client is looking to ‘democratise data’ by using Alteryx and data visualisation tooling in their target state architecture. People in their organisation will be given extra training to use these technologies more effectively.

Maximise the return on investment to achieve IFRS 17 compliance
You have to comply with IFRS 17, so let’s do it by investing in solutions that enable your organisation. Whether it’s outsourcing more of your technology stack or designing data storage solutions to make full use of your data, we’re having a number of conversations advising on how this can align to future ambitions.

I’m sure you have a lot of questions. On Tuesday 24 March at 11:00AM GMT/07:00 DST/19:00 HKT, we’re hosting our next Global IFRS 17 Webex with a panel of experts spanning IFRS 17 accounting, actuarial and technology. I hope by then we have certainty over when the standard will be effective. Sign up today and join the conversation.

Alex Bertolotti

Alex Bertolotti | Partner, Global IFRS 17 Lead
Profile | Email | +44 (0)7525 298694