Business Wire IndiaWhen the new International Financial Reporting Standard 17 (IFRS 17) takes effect on January 1, 2021, it will upend decades-old insurance financial reporting standards. Though seemingly the tiniest glimmer on a distant horizon, navigating the intricacies of IFRS 17 will require painstaking planning and precision. Only insurers that act now put themselves on the best footing for success – and they now have the benefit of relying on analytics leader SAS to tackle the new standard head-on.
SAS® Regulatory Content for IFRS 17 provides for all of the requirements of IFRS 17 in one platform for users of all disciplines – actuaries, accountants and IT alike. The new solution is built on the same flexible, high-performance analytics environment that’s helping insurance firms meet Solvency II and the banking industry tackle its own regulatory disruption in IFRS 9. Key features include:
- Predefined, comprehensive data model.
- A powerful computation engine inclusive of IFRS 17’s required calculation methods (BBA/GMM, PAA and VFA approaches).
- Repeatable, customizable end-to-end processes those are fully transparent and auditable.
- Advanced financial reports with drill-down capabilities for accessing the details and source data behind the figures.
- Seamless integration with existing accounting and actuarial solutions.
“The disparate nature of incumbent accounting systems, actuarial tools and data sources, conventionally with weak workflow and integration capabilities, will pose a significant hurdle for insurers to overcome in complying with IFRS 17, particularly as many grapple with IFRS 9 compliance in tandem,” said Cubillas Ding, Research Director at Celent. “Beyond robust analytics and calculations optimized for performance, the imperative for insurers will be to bolster the integrity, transparency and governance of relevant data supply chains in an automated and industrialized manner, yet without compromising flexibility in adapting to methodological and system changes.”
Will insurers be ready for IFRS 17?
Issued by the International Accounting Standards Board (IASB) in May 2017, IFRS 17 redefines insurers’ accounting standards in more than 100 countries. Its primary objective is to increase industry transparency by improving comparability of financial statements across organizations – how each earns profits or incurs losses through underwriting services and investing customer premiums. Whatever the compliance approach, IFRS 17 will have a significant impact on financial performance, operational processes, and data and systems.
So how are insurers reacting to the forthcoming standard? Of 100 UK-based insurance executives surveyed by SAS in early 2018, 61 percent said they have already begun preparing for its mandates, with 19 percent declaring it a top strategic priority. Eighty-three percent indicated they will need to change existing systems and processes to comply with IFRS 17. And nearly half anticipate either making additional investments (24 percent) or replacing entirely their current systems and processes (23 percent). To delve deeper into the survey results, download the report.
“IFRS 17 will undoubtedly represent the most significant change to Indian insurance accounting requirements recent times and its impact will go beyond the actuarial & finance functions of the industry — with a major impact across Data, Systems and Processes.
SAS helps insurers manage this complexity with a consistent, transparent and comprehensive approach – right from data quality to the required calculations and reporting – to successfully implement IFRS17.” said Kunal Aman, Head of Marketing at SAS India.
Tackling the biggest insurance reporting shake-up in decades
IFRS 17 will bring greater complexity to insurers’ accounting practices and require a complete overhaul of the workflow between actuaries, risk managers and accounting. Forward-thinking insurers aren’t wasting any time on the road to compliance.
German financial group Wüstenrot & Württembergische (W&W), for example, has long relied on SAS’ risk management and data quality solutions to help it meet banking regulations and compliance requirements. Now facing the regulatory upheaval of IFRS 17 in its insurance business, W&W is expanding its SAS footprint and analytic capabilities to create a risk management platform that complies with the latest regulatory requirements.
“To meet IFRS 17 requirements, W&W needs a solution that automates the end-to-end processes for data import, makes calculations using the relevant IFRS 17 methods and creates the essential, granularly auditable accounting records,” says Carmen Hess, Senior Project Manager at W&W Informatik GmbH. “The SAS solution ticks all those boxes while also fostering greater cohesion and cooperation between the accounting, actuarial and IT departments via a unified, customizable platform.”
HDI Seguros, the Mexican branch of Hannover, Germany-based HDI Global Insurance Company, is another company investing strategically in analytic tools for IFRS 17 compliance.
“Introducing new functions in the framework of IFRS 17’s regulatory requirements led us to acquire the SAS risk solution, with which we also cover our own objectives in the areas of financial planning, claims, pricing and analytics for greater business intelligence,” said Mauro Soria, Actuary Director of HDI Mexico. “We believe that market-leading analytical technology is important to ensuring that we will maintain a good role in the face of regulatory entities and, at the same time, continue to optimize our business.”
A once-in-a-lifetime change in insurance accounting: Where to start?
To learn more about how SAS is helping organizations prepare for the new insurance accounting paradigm, register for the on-demand webinar, IFRS 17: Turning Compliance Into an Opportunity. From defining an overall strategy to the essential implementation steps, SAS experts summarize what insurers need to know to jump-start their journey to IFRS 17 compliance.
“January 2021 seems far away, but keep in mind that insurers will be expected to present comparative results in 2020 based on 2019 data. That means most of the implementation and training should already be done by that time,” said Troy Haines, Senior Vice President and head of the risk management division at SAS. “Whatever an organization’s current level of readiness, the time to take action is now.”