Written by Optimus in partnership with Valani Global, BDO and KR Consulting. (This is the sixth in a series of seven articles.)
The statutory requirements of IFRS 17 are forcing a massive disruption and ultimately a transformation within the insurance industry. No IFRS compliant insurer will be able to escape the profound changes in their operating model, accounting policies, and subsequent accounting system outputs and flows. This extends to connectivity and alignment with and actuarial systems and outputs—all underpinned by IT systems construct data and reporting requirements.
By now, most insurers have established an IFRS 17 implementation plan and are working on the design of their solution. This article outlines how the right data strategy for IFRS 17 can be extended across the enterprise to advance an insurer’s data maturity rapidly and cost effectively leveraging the investments in IFRS 17 as a foundation.
In working with many IT leaders on IFRS 17, we recognize that adoption of the new standard poses many issues for insurers, including:
- Significant data connectivity asks are being made to fulfill the requirements of IFRS 17.
- Quick decisions on cloud may be required as many IFRS 17 accounting engines are only available in a cloud model.
- A complex mix of current and legacy infrastructure present challenges for IT teams.
- Considerable differences between insurers in terms of where they are on the data maturity spectrum.
Despite these challenges, the data advancements required for IFRS 17 are often the right advancements to apply to the overall enterprise. This includes the following benefits.
Data as an asset
- The value of the data for most IFRS 17 implementations is high given the significant footprint of policy, claims, financial, investments, and reinsurance data residing in a variety of source systems. Establishing the right single source of the truth for the IFRS 17 dataset can naturally become the right single source of the truth for the enterprise.
Agile data integration
- IFRS 17 often requires a significant investment in data integration because of the broad impact across the technology and data landscape. Those who combine the integration needs of IFRS 17 with the integration needs of other business objectives are able to achieve economies of scale by leveraging the same integration strategy and platform.
- IFRS 17 presents a catalyst opportunity for IT to move away from a legacy point-to-point approach and adopt a modern hub approach. This enables not only the data connectivity for IFRS 17, but also sets the foundation for data maturity advancement and advanced analytics outcomes by leveraging the potential of AI.
Business intelligence and advanced analytics maturity
- Given the rich dataset required for IFRS 17 and the financial and management reporting requirements, it’s a great opportunity to leverage the business intelligence and advanced analytics used for IFRS 17 for the enterprise.
Data governance and literacy maturity
- The pragmatic data governance and data operations strategy required for IFRS 17 can be applied as the gold standard for other high-value data sets across the organization.
- The data literacy and education approach for IFRS 17 is often the same approach for advancing an organization’s data literacy overall.
The deadline for IFRS 17 compliance is rapidly approaching, making it crucial for insurers to examine and act on their compliance plans sooner rather than later. The question for most insurers now is: will they simply create a minimum viable product or will they seize this opportunity to truly transform their business and take a market leadership position?
BDO has established a data platform accelerator for the insurance industry known as InsurHub to meet the data needs of IFRS 17 and establish the foundation for enterprise data advancement. It leverages the Microsoft Azure data platform and contains fundamental best practices to be the gold standard for pragmatic data governance and operations.
InsurHub can help accelerate the path to IFRS 17 compliance and establish the foundation for enterprise data advancement. The InsurHub accelerator shortens the timeline of IFRS 17 implementations with a library of data connectors, a data lake repository aligned with the requirements of IFRS 17, key financial statements and management reports, and a collection of advanced analytics models. It contains fundamental best practices to be the gold standard for pragmatic data governance and operations.
Don't let this opportunity for enterprise data advancement pass by. Our team can help you build a data hub strategy that accelerates your IFRS 17 journey and advances the data maturity needs of your organization. Contact us to get started. (This is the fifth in a series of seven articles.)
Valani Global's Services
Valani Global supports life insurance companies in achieving their financial risk management goals through implementations of Moody’s Analytics solutions including AXIS and RiskIntegrity for IFRS 17.
Contact us for more information on our IFRS 17 Program.
Nazir Valani, President & Co-Founder
With access to a global knowledge base and professional expertise, BDO offers extensive value to our clients across all segments of the insurance and financial services industry.
KR Services specializes in the practical application of international financial reporting and actuarial standards in the developing world.