IFRS 17 Deadlines Extended – Providing Opportunities for Data Strategy
In March 2020 the International Accounting Standards Board (IASB) extended the deadline for IFRS 17 reporting to 1st January 2023. IFRS 17 is the new International Financial Reporting Standard for Insurance. This is very good news for some. With the extended deadline, Insurance companies may be able to take a short breather, but the time to act is now.
The challenges with the new reporting standard are just too many. We are seeing the following typical issues:
- Disparate systems based on lines of business and not on customer information.
- Calculations are performed on spreadsheets with manual reporting steps for financial data
- Blackbox reporting with little to no data lineage
IFRS 17 entails key fundamental changes in the way the insurance industry works. Under the new standards, Insurance companies now need to:
- Create and manage portfolios of insurance contracts based on similar risk profiles
- Differentiate between income and expenses separately for insurance contracts and reinsurance contracts and also choose between calculations approaches like the modified retrospective approach and fair value approaches for the same.
- Measure contract value estimates during each reporting period based on Contractual Service Margins indicating unearned profits of different groups of insurance contracts discounted and weighted cash flows and risk adjustment factors
IFRS 17 reporting requires significant changes in how data is managed in all operational functions such as portfolio management, claims management, actuaries and finance. It is a complete shift towards a more data centred approach.
Here’s what you need to consider at a high level:
- A centralized, flexible and scalable architecture
- A single solution for finance and risk calculations with integrations from multiple systems, also ensuring data consistency.
- A transparent data governance structure for ensuring and maintaining data quality complete with audibility and lineage so that data can be traced back to its roots in case of problems.
- Pre-defined data models feeding into canned reporting for IFRS17 calculations so that underlying data could be easily mapped to the models.
- Drill-down capabilities for the reports so that users can easily carry out analysis on end results.
This can be achieved with a data strategy geared towards IFRS 17 standards ensuring that data from multiple business functions is not only integrated and managed centrally but also done so transparently.
Our team at Eclipsys can help you design your data strategy so you can easily govern, cleanse, correlate and store data from multiple systems necessary for your IFRS 17 reporting.
Connect with us to discuss how we can not only ensure you are compliant, but you start to put your data first.