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People are surely getting regulatory fatigue by now. Solvency II has barely churned into business as usual and here comes IFRS what? It is complex, convoluted and many times worse than Solvency II, that we have just been through in the last few years.
With my actuarial thinking cap on, whenever I look at a complex problem, I always ask myself "let’s go back to basics and understand what are we trying to achieve here." IFRS17 fundamentally changes the way insurance contracts are measured and, therefore, how profit is recognised. The word 'fundamentally' is important. However, we shouldn't just consider whether we can buy a 'magic' IFRS 17 software solution and hope it will take care of all the calculations. This is because calculation is only part of the problem.
We need to understand what the end game looks like. This then triggers the questions below.
- What data do we need?
- And more importantly, what data do we have?
If the answers to the above questions do not align, then we have a problem. Adding another system on top of existing systems (an umbrella system) will not help if you do not have the right data in the first place. Therefore, we believe there is a need to look at IFRS 17 as an opportunity to reshape your business. Take control of your data and leverage it not just for reporting, but for your organisation to be a data driven business which allows you to know your customers, reduce risk and fraud, gain accountability and governance, and differentiate your organisation to increase profit.
‘Back to basics’ is by no means an easy task. The graphic below shows a map of the data lineage within a typical insurance organisation (courtesy of Hitachi Consulting). It is a complex data flow but with a holistic approach to data, systems and processes you can turn you data into gold dust!
Barnett Waddingham can help insurers understand the endgame of IFRS 17, data requirements and (with our consortium of partners that includes Collibra, EDMWorks, Hitachi Consulting and Xceptor) we can be your trusted advisers in a complex but innovative transformation process.