Paid IFRS 17: Filling the Gaps in Data & Technology Systems

IFRS 17 is an accounting standard that will result in a complete overhaul of an insurer’s financial statements, though finance alone cannot work through this complex change in isolation. Considering the significance of the impact across the organization, IFRS 17 program leaders must engage cross-departmental input and subject matter expertise including finance, risk, actuarial and information technology.

In fact, surveys conducted to date indicate that many insurers rank understanding existing capabilities of IT systems against the new requirements of IFRS 17 as a highly complex, time consuming activity within the overall IFRS 17 impact assessment for their organization.

In part, this is attributed to the fact that accounting standards for insurance contracts have been relatively stable in Canada for many years, so generally speaking, insurers have often chosen to make modest adjustments and enhancements over significant replacement and modernization of accounting and insurance contract management systems. In many cases, IFRS 17 will create an opportunity to rethink the way an insurer uses data & technology systems – in other cases, IFRS 17 may, in fact, force such changes.

WEBINAR: The IFRS 17 journey has begun. Register now.

IT leaders charged with the data & technology aspects of IFRS 17 compliance will need to assess many options and decide whether new capabilities should be “bolted on” to existing systems, or if new financial planning, reporting and integration technologies must be implemented to meet requirements that do not currently exist within IT today, including:

• Data collection and transformation: ingesting data from source systems and getting it to a usable state
• Data modelling: making changes to the data so as to comply with the selected IFRS 17 accounting policy
• Data presentation and reporting: preparing a full suite of financial statements including comparatives and disclosures, as well as analysis on data models.

With these key capabilities in mind, there are also many other factors to consider when deciding on the right choices for data & technology considerations to meet your organizations unique requirements, such as:

• The number of source systems required to model the IFRS 17 adjustments – including the general ledger, policy systems and other existing corporate systems and data sources.
• The volume and level of granularity / grouping of data from these systems
• The level of actuarial input and review to the models
• The number of source or destination systems that need to be updated for financial and operational reporting

The resulting decisions to invest in new or existing systems may also take on philosophical overtones – whether to take straight forward approach to simply comply with the IFRS 17 standard, or take a more transformational path through the implementation of new business processes and technology systems. In addition, many insurers are simultaneously considering new data management strategies that create centralized data that can be used to achieve compliance, and other purposes related to advanced analytics and insights across the business.

WEBINAR: The IFRS 17 journey has begun. Register now.

Simple enough, right? The net of it is that the data & technology considerations associated with IFRS 17 can be time consuming and complex – meaning that IT leaders should begin the process early to determine the impact of the new standard on data & technology systems. For many insurers, this could also mean seeking outside assistance to accelerate the assessment, and augment internal subject matter expertise with industry practices and experience in the field.

BDO IT Solutions is the technology services division of BDO Canada LLP a leading provider of professional services to clients of all sizes in virtually all business sectors. Our insurance industry team leverages deep industry knowledge of IFRS 17 to deliver data and technology services required for transformation to the new standard. For inquiries or more information please contact: