2018年-普华永道全球_Three_simple_ideas_can_take_the_panic_out_of_your_prep_for_IFRS_17__12页_6mb

IFRS 17 Implementation Summary

Core Content

The document outlines the key considerations and strategies for insurance companies preparing for the implementation of IFRS 17, which was issued in May 2017 and requires adoption within three years. It emphasizes the need for a strategic and flexible approach to manage the significant technical and operational changes required.

Main Points

1. Soft Design Approach

• Definition: A flexible method to design and implement changes, allowing for course corrections during the process.
• Steps:
  • Make working assumptions about systems and architecture.
  • Anticipate problems and possible solutions.
  • Conduct proof of concept, prototyping, and sandboxing.
• Benefits:
  • Reduces the risk of last-minute scrambling.
  • Enables incremental improvements and avoids over-engineering.

2. Think Right to Left

• Focus on defining the end goal before making technical changes.
• Work backward from the desired outcome to determine the necessary systems, processes, and data requirements.
• Example: During Solvency II implementation, companies often overlooked data requirements, leading to delays and inefficiencies.

3. Apply Lessons from Solvency II

• Use previous experience with Solvency II to guide IFRS 17 implementation.
• Consider process, data, and control requirements rather than jumping straight into system development.
• Ensure the chosen solution aligns with the technical needs of Contractual Service Margin (CSM) and supports a realistic timetable.

4. Establish Governance

• Form a dedicated design authority with top talent from relevant functions.
• Empower this team to make decisions and ensure accountability.
• Example: A client company formed a design authority with the best accountant, actuary, and finance systems person, which proved highly effective.

5. Define the End Goal and Transition State

• Choose between a compliance-only approach or a maximising investment approach.
• Compliance Only:
  • Focus on minimal investment to meet IFRS 17 requirements.
  • Leverage existing Solvency II systems for Best Estimate Liability and Risk Adjustment.
• Maximising Investment:
  • Aim to capture additional benefits through process automation and system upgrades.
  • Consider cloud-based solutions, data integration, and harmonisation of reporting systems.

6. Create a Road Map

• Develop a timeline that includes key technical decisions, vendor engagement, and system testing.
• Focus on short-term compliance and long-term strategic benefits.
• Use the time frame of 3–6 months to make essential technical decisions and engage vendors in extended proof of concepts.

7. Learn from Your Peers

• There is no one-size-fits-all approach to IFRS 17 implementation.
• Examples:
  • Some companies are running separate systems for IFRS 17 and Solvency II, but harmonisation is often more efficient.
  • A company that initially planned to house the general ledger replacement within the IFRS 17 project later split the initiative to manage risk and complexity.
• Best Practices:
  • Consider cloud-based solutions for actuarial models and data integration.
  • Reuse existing data warehouses and explore data lake capabilities for greater flexibility.

Key Information

• Timeframe: Insurance companies have less than three years to implement IFRS 17.
• Technical Challenges:
  • Overhaul of underlying account systems.
  • Introduction of new liability measurement (CSM).
  • Increased risk adjustment and cash flow analysis.
• Operational Impact:
  • Need for more detailed data.
  • Changes in reporting and disclosure requirements.
  • Increased interdependence between finance and actuarial functions.
• Recommendations:
  • Use a soft design approach to manage complexity.
  • Prioritise end goals and work backward.
  • Leverage existing systems and learn from peer experiences.
  • Consider cloud-based solutions and data lakes for scalability and flexibility.

Selected Insights

• Data Integration: Existing technologies are being reused; some may be phased out.
• Actuarial Models: Cloud-based solutions are becoming more common.
• CSM: There is a split in the market between finance-based and actuarial-based solutions.
• General Ledger: Many insurers are using existing GL platforms but are also planning transformational upgrades.
• Consolidation and Disclosures: Integration of these processes with cloud-based solutions is a trend.
• FP&A and BI: Cloud-based capabilities are being implemented for financial planning and business intelligence.
• Data Lakes: Increasingly considered for storing raw data and enabling flexible analysis.

Conclusion

The document highlights that while IFRS 17 presents a significant challenge, a strategic, flexible, and peer-informed approach can help insurers manage the transition effectively. The key is to balance compliance with long-term benefits and to ensure that the implementation is well-planned and governed.