At the recent Finance, Risk, and Insurance Summit supported by Deloitte, SAP, and FIS, the topic of insurance contracts changes came up. The significant impact on insurance companies in Australia in the coming years became apparent. What is clear is that organizations must begin implementing IFRS 17 immediately, as it will be effective from January 1, 2021. In Australia, IFRS 17 has informed the development of the AASB 17 standard. Ongoing conversations aligning these needs to APRA reporting requirements could provide even more clarity on future compliance and regulation, from a reporting and auditability practice.
As you implement these policies, you must identify opportunities to improve your organization’s processes and transform its finances. Let’s explore these opportunities in detail, with insights from leading insurance experts.
Increase your transparency
Francesco Nagari, partner and global IFRS insurance leader at Deloitte, spoke highly of IFRS 17. His main point was that these new policies will “make the performance of the insurance industry far more transparent than it is today.”
This praise of IFRS 17 is perfectly sensible. After all, its policies were engineered to encourage transparency. One such policy states that you must present your underwriting and financial results separately.
As IFRS 17 enforces results separation to encourage transparency, you must scrutinize your data at an almost cellular level. How can you manage this increase in data analysis?
The solution is accessible, auditable insurance analysis software – software that allows you to access and integrate data across your organization.
Improve your finances
John Winters, director of product management at FIS, when asked about the potential of IFRS 17 to transform finances, said that these policies “ask us to re-engineer the way our numbers flow from our actuarial department to our financial department.”
More specifically, IFRS 17 asks you to remeasure your cash flows each year. As your company integrates this into its operations, you must embrace this chance to analyze your processes. Most importantly, you must optimize your actuarial department.
If you can optimize the current value of your future cash flows, your finance department will have more assets to invest in innovation. But how can you optimize the value of cash that hasn’t come in yet?
By feeding cash-flow data to a machine learning application, you can generate patterns and predictions for your actuarial department. This will help ensure compliance with IFRS 17 and stability for your future.
Innovate your organization
Rene Thommen, vice president of IBU insurance at SAP, encouraged companies to go beyond compliance with IFRS 17. To this end, he said,“If someone spends so much for IFRS 17, they should take a broader step: achieving operational excellence in their financial processes.”
Integrating innovation in your agency usually requires an overhaul across your organization. Luckily, you’ll have to overhaul a lot of your organization to integrate IFRS 17 anyway. As one attendee remarked, from his perspective as CFO of a global insurance company: “IFRS17 is a once-in-a-decade opportunity to fix the financial flows between operations, actuarial, and finance.”
As you can see, IFRS 17 is an opportunity to lead your actuarial and finance teams into the future of insurance. With connected data and more accurate finance indicators (such as behavior and social influence), you can set new benchmarks for successful insurers.
To optimize your operations with innovative technologies, explore SAP’s insurance solutions and SAP Leonardo Machine Learning Foundation. If you missed the recent Finance, Risk, and Insurance Summit with Deloitte, FIS, and SAP, you can watch the key outtakes from our experts here.