The new International Financial Reporting Standard 17 (IFRS 17) will significantly change the way insurance contracts are measured and reported on.
Under IFRS 17, insurers in more than 100 countries will need to update their systems, adopt new processes and, above all, improve integration between actuaries and finance. With expertise in these two traditionally siloed functions, leading technology providers FIS and SAP have joined forces to help insurers develop a complete, consistent view of financial health and risk.
Insurers must already cope with IFRS 9 for financial instruments, which is currently in implementation, and IFRS 4, an interim standard for insurance contracts that essentially permits a wide variety of inconsistent local accounting policies and processes. IFRS 17 will sweep away these inconsistencies and make the insurance contract accounting process more transparent. But it will also ask insurers to alter their liability calculations to include the new metrics demanded by the standard, and bring in a new standard for income statement presentation, with many additional governance and disclosure requirements.
In short, IFRS makes complex demands on insurance operations – and its requirements for increased visibility and controls around risk assessment will make the interaction between actuarial and accounting functions more important than ever. That’s precisely why SAP has joined forces with FIS, a leading provider of actuarial software. Together, FIS’ award-winning Prophet risk management solution suite and SAP’s powerful Insurance Analyzer solution for insurance accounting will provide a robust foundation for compliance with IFRS 17 that minimizes costs, makes compliance more manageable and takes the guesswork out of financial and actuarial convergence.
Given the expected changes to processes, the new rigor demanded of actuarial reporting, and the volume and interdependency of data to be generated under IFRS 17, it’s critical for the actuarial team and its tools to align with all insurance business units, especially finance. SAP, FIS and major consultancies are collaborating to solve the challenges involved for everyone concerned – from actuaries to accountants and financial services professionals.
It’s our joint goal to guide our clients through their IFRS 17 journey. And with the right tools, support and a new culture of collaboration, your business could emerge stronger than ever.
Bob Cummings is Global Head Insurance Business Unit, SAP
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