{"id":2332,"date":"0202-07-06T15:33:00","date_gmt":"0202-07-06T15:33:00","guid":{"rendered":"https:\/\/expleo.com\/global\/en\/?post_type=insight&p=2332"},"modified":"2023-08-28T13:29:42","modified_gmt":"2023-08-28T13:29:42","slug":"ifrs-17-compliance-will-demand-a-transformation-that-disrupts-are-you-prepared","status":"publish","type":"insights","link":"https:\/\/expleo.com\/global\/en\/insights\/blog\/ifrs-17-compliance-will-demand-a-transformation-that-disrupts-are-you-prepared\/","title":{"rendered":"IFRS 17 compliance will demand a transformation that disrupts \u2013 are you prepared?"},"content":{"rendered":"\t\t
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The revised 2023 deadline for IFRS 17 offers the insurance industry a welcome delay, as firms size up the complexities and opportunities of compliance with the new standard. Assessing your transformation status will help avoid any missed opportunities, says Expleo\u2019s Kate Cordell.<\/em><\/p>

The International Accounting Standards Board\u2019s (IASB) decision to further defer the IFRS 17 Insurance Contracts standard to 2023, due to the disruption of the COVID-19 pandemic, was broadly welcomed by those in the industry. In all likelihood, this date proves to be a hard deadline. While some firms have started their journey to compliance, many others are still at the preliminary assessment stage. IFRS 17 is the most impactful change for accounting in the insurance industry for several decades. Early reports suggest there could be some turbulent months ahead, as the practicalities of transformation kick in.<\/p>\t\t\t\t\t\t\t\t<\/div>\n\t\t\t\t<\/div>\n\t\t\t\t

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The vision of IFRS 17 \u2013 that all firms should communicate insurance contracts to investors using the same new set of metrics \u2013 risks turning into a \u2018hydra-headed\u2019 challenge: whenever you solve one problem, another two emerge in its place. This is largely due to the autonomous nature of the regulation. Instead of simply selecting an application and installing it, each firm must interpret for themselves how the standard corresponds to their current circumstances, and then create a system of reporting that will serve their business in the future.<\/p>\t\t\t\t\t\t\t\t<\/div>\n\t\t\t\t<\/div>\n\t\t\t\t

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Apples for apples?\n<\/h2>\t\t\t\t<\/div>\n\t\t\t\t<\/div>\n\t\t\t\t
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Alongside a sense of relief, the 2023 deferment has brought a wave of optimism, given firms have more time to seize the wider transformational benefits that will come from improved data management and systems integration. Every firm needs to report in the same way, but how they get there will differ based on their business model. Those that recognise IFRS 17 as an opportunity, will break it down into its component parts: data, systems, processes and people, and then build it back up.<\/p>

Compliance with IFRS 17 will demand a transformation programme that disrupts the farthest reaches of the organisation. It\u2019s not just the finance or the accounting department that must adapt. The actuary, operations and IT departments are all involved. Taking uniform decisions will therefore present one of the biggest challenges. How do you get all of the functions working as a single team? This need for greater integration will require careful stakeholder management. As firms lift the lid on their organisational structure, they may see the need for wholesale changes. The consequences of IFRS 17 could ripple all the way across the business.<\/p>

Alongside data, systems and processes, it\u2019s important not to overlook the people implications. Can you align the leadership and drive this through as a coherent transformation programme for maximum, long-term value? With the inevitable need for automation and restructuring, are you ready to confront issues such as role development and redundancies? Treating IFRS 17 as a holistic transformational programme is therefore critical for answering these questions. Choosing the next steps will benefit from a rigorous assessment to determine current maturity against a number of underlying issues.<\/p>\t\t\t\t\t\t\t\t<\/div>\n\t\t\t\t<\/div>\n\t\t\t\t

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Testing\u2026testing<\/h2>\t\t\t\t<\/div>\n\t\t\t\t<\/div>\n\t\t\t\t
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The IASB has also decided to extend the exemption currently in place for some insurers regarding the application of IFRS 9 Financial Instruments to enable them to implement IFRS 9 and IFRS 17 at the same time. While running both in parallel isn\u2019t mandatory, it presents a valuable opportunity to test incrementally as you scale up to IFRS 17.<\/p>

Over and above extensive regulatory testing in the conventional sense, firms will need rigorous data testing to ensure an accurate stream of information for reporting. Again, this provides wider benefits outside IFRS 17, given the vital importance of effective data management and analytics. Building robust solutions is crucial for future proofing, both from a regulatory and business perspective.<\/p>

Our advice at Expleo is to consider IFRS 17 as a \u2018potential missed opportunity\u2019 for improving your business functions and operating models. This change-up is particularly relevant as the industry responds to the disruption from COVID-19. For example, the ongoing need for social distancing and remote working will have operating model implications anyway, not least in terms of streamlining finance and actuarial teams, so there are potential organisational synergies. In addition, the new standard aspires to increase transparency from an investor\u2019s point of view. In the current economic climate, any measures that will help attract new investors should be top priority.<\/p>

Alongside\u00a0testing,\u00a0quality assurance\u00a0and\u00a0change management, Expleo offers an assessment service that will help you gauge your progress on the IFRS 17 journey. Our technical experts and consultants are ready to discuss and evaluate your portfolio models and system impacted areas, as well as diagnose additional data requirements. We can also help assess whether you have identified all relevant system changes and cross-check the design of your IFRS 17 implementation strategy.<\/p>

Contact us<\/a>\u00a0to find out more.<\/p>\t\t\t\t\t\t\t\t<\/div>\n\t\t\t\t<\/div>\n\t\t\t\t\t<\/div>\n\t\t<\/div>\n\t\t\t\t\t<\/div>\n\t\t<\/section>\n\t\t\t\t<\/div>\n\t\t","protected":false},"excerpt":{"rendered":"

The revised 2023 deadline for IFRS 17 offers the insurance industry a welcome delay, as firms size up the complexities and opportunities of compliance with the new standard. 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