Challenges remain as IFRS 17 implementation approaches

Project management, system implementation, and accessing resources are the biggest challenges, as the start date of the new insurance accounting standard IFRS 17 nears, Chris Cornell, partner, audit, and national sector leader, insurance, with KPMG in Canada told Canadian Underwriter in an interview for the Oct. 2021 issue.

What follows are key excerpts from his interview.

cu | What challenges and successes are you seeing from IFRS 17 implementation?

There’s still a lot of work to be done to get through the implementation, but insurers are ramping up accordingly. The top three challenges right now are project management, system implementation, and resources.

For project management, IFRS 17 involves the entire organization. And I think there were some grand views of what could be done at the beginning. Now [the discussion] is more around, how do we ensure that we’re going to be able to comply? And how do we get enough team member participation in order to meet the deadlines? Project management has been one challenge, especially given that people are navigating through the pandemic as well as trying to take on this big accounting standard change.

System providers are continuing to have to change, as a result of tweaks to the standard over the last couple of years. That’s proving to be a challenge in terms of making sure that they’re up to date on all of the requirements within the standard. Then you’re going to have to test things before you make them online.

And lastly, resources. All insurers in Canada are going to have to comply with IFRS 17. There’s a finite number of resources to get organizations ready for this standard. It’s been a challenge in terms of making sure you’ve got the right resources available because of all the competing priorities within organizations, not just IFRS 17, but digital transformation and those types of things as well.

cu | What about some successes?

There have been some good successes, too. IFRS 17 has allowed organizations to really optimize certain processes around finance and actuarial, and making sure that they’re working seamlessly, hopefully digitizing more of those processes to make it more efficient, and potentially giving organizations better information when they’re looking at their financial reporting capabilities. That’s a big [success] that we’ve seen.

The other one is it really has helped to build teams within organizations. Because it’s such a challenging standard and requires so many people within the organization, it has allowed people to work cross-functionally to learn more about what their teammates are doing. So that’s been good as well.

cu | Digitization has been a hot topic of discussion for a while now. How is the industry doing in this regard?

We did a survey focused on global insurers and 56% of insurers say the most important thing from the digital platform they put in place is to meet customer expectations. That’s their largest and number one priority. But only 9% of insurers compare or benchmark themselves against other digital retailers. The majority of them — 64% — benchmark themselves against their direct competition: other insurers.

So, it’s a bit of a dichotomy. We want to have amazing world-class customer experience, but you’re comparing yourself against an industry that’s been a laggard in terms of digitization over the years.

In claims, we’re further behind other countries. In certain instances in China, you can be in a car accident and have your claim paid out within an hour. It can happen that fast. They’ll send a drone down, take a picture, do the assessment, and your claim payment is basically in your virtual wallet. We’re a long way from that. And I don’t think at this point, Canadians expect that. But that’s where the industry is going.

Feature image via iStock.com/Paul Lawrence Photography