This article was produced in partnership with Aptitude Software
Karen Surca, of Insurance Business Canada, sat down with Brian Heale, senior functional solution consultant and IFRS 17 expert, Aptitude Software, and Mike Martin, director, field marketing, North America with Aptitude Software, to discuss the need to meet IFRS 17 rules and the technology platform to help them get there outlined in its whitepaper.
The job of insurance finance professionals has often been daunting, especially through the bumpy pandemic path. In a hardened market driven by supply chain shortages, cyber risks, increased premiums, inflationary concerns, and innovative new entrants, insurance finance professionals have been faced with a litany of challenges.
Now, there is another complication on the horizon. In less than a year, all insurers that currently report under IFRS 4 will have to comply with the complex new accounting regulation, IFRS 17, set by the International Accounting Standards Board (IASB). This includes US-based companies that do business internationally.
Although most large insurance players will more than likely have their accounting ducks in a row, the thought of scrambling to put the mechanisms in place to report properly may be sending a shiver down the spines of some small to mid-size insurance providers.
To help provide confidence in compliance and the building blocks for finance transformation, Aptitude Software’s award-winning IFRS 17 solutions – Aptitude was recently named category leader in Chartis RiskTech Quadrant® for IFRS 17/LDTI Compliance, 2022 - offers the answer to quickly getting over the compliance hump.
Aptitude software has been providing sought-after software solutions for more than 20 years that help insurance professionals run their global businesses and comply with complex, mandatory accounting regulations.
Compiling valuable information, Aptitude has authored an informative eBook entitled 7 Must-Have Capabilities for a Successful IFRS 17 Project to take some of the guesswork out of complying with the new IFRS 17 standard.
“In this eBook, we highlight seven different capabilities that insurers need to consider ensuring a successful IFRS 17 project - whether they have a solution in place already or not,” Brian Heale (pictured top), senior functional solution consultant and IFRS 17 expert, Aptitude Software, explained.
The IFRS 17 standard, which overhauls the way insurance contracts are accounted for, was not just sprung on insurance providers recently, Heale is quick to point out. “The standard was originally issued in 2017 but its development has spanned 20 years. In 2020 it was amended, and the effective date was pushed back a year to 2023. Now the deadline insurers have been anticipating for years is just around the corner,” he said.
“The level of complexity and cost involved in this compliance initiative is astronomical – we’re talking upwards of an estimated $20 billion spent by the global insurance sector to implement IFRS 17 and the equivalent of over 10,000 full-time employees.
“Large insurers should have been doing parallel reporting this year to understand how their reporting numbers are going to differ between IFRS 4 and IFRS 17. This may not be necessary for smaller insurers, but they absolutely will need a solution that allows them to see the impact of accounting policy changes on KPIs under the new standard. All insurers must be able to articulate those changes to the market, rating agencies, shareholders, and other stakeholders.”
Aptitude brought its IFRS 17 solution to the market back in 2018 and as an organization has developed a number of regulatory solutions.
“Aptitude’s IFRS 17 Solution is the most mature solution on the market and supports the complex data and accounting requirements of the standard. Over the last few years, we have seen insurers who adopted an actuarial-based approach or opted to build their own solutions coming back to the market for a second evaluation,” Heale stated.
“The challenge for many insurers is that they have initially focused their projects on the need to determine the calculations for IFRS 17, assuming that the accounting piece can be addressed later. Unfortunately, what they are finding – and what we’ve laid out in the eBook – is that the surrounding data and accounting processes cannot be an afterthought,” summarized Mike Martin (pictured below), director, field marketing, North America with Aptitude Software.
Martin added that insurers may be asking themselves: What does it mean to be covered? What does it mean to have full compliance when this finally does kick in? How do I get the maximum business value out of this exercise?
By identifying key steps to follow and capabilities to secure, Aptitude’s eBook outlines what is necessary for IFRS 17 success.
Download the whitepaper now: Seven must-have capabilities for an IFRS 17 project
For example, there is a need for ‘data persistence and a clear audit trail’ as one integral part of the IFRS 17 reporting paradigm. Compiling, storing, and tracking this data digitally remains crucial, Martin argued.
Other steps outlined in the eBook include making an ‘editable chart of accounts, as well as properly and clearly disclosing accounting data.’
All recommended steps represent rungs on the ladder to reporting accuracy and, as a result, need to be included in the ‘solutions approach’ to work effectively, Martin pointed out.
“The message that is important here is the speed to implementation that we offer. For insurers that need to get up and running quickly, we offer a proven path to compliance,” Heale highlighted.
“We’ve implemented our IFRS 17 solutions at a wide range of insurers, from some of the largest global insurers to innovative insurtechs, and everything in between. Our teams has taken every learning and best practice from those engagements and built all that back into our solutions.”
Download the whitepaper now: Seven must-have capabilities for an IFRS 17 project
