November 21, 2018 by BDO
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.
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:
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 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.
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:
National Industry Manager – Insurance
BDO IT Solutions
Partner, BDO Technology Solutions
BDO IT Solutions