When it comes into force in the early 2020s, IFRS 17 will place new demands on insurers – especially in regions that are yet to experience Solvency II or equivalent levels of regulation. And most under pressure will be firms with legacy, poorly integrated actuarial solutions. So, given the planning and considerations involved, it could be high time to set an upgrade in motion.
A surprisingly high proportion of insurance companies still use actuarial systems that are two decades old or more. They may have got by until now, but a jumble of antiquated solutions held together by “band aids” and in-house “glue” will lack the control and cohesion that the coming accountancy standard is set to require.
The good news is that risk management software vendors never stand still and have embraced wider developments in digital technology to re-engineer their platforms to a new, enterprise-ready level. The word “enterprise” can be overused, but in this context reflects the fact that insurers’ risk solutions should no longer be individual desktop platforms managed by actuarial teams themselves.
Today, actuarial systems are critical to businesses as a whole and should be used to underpin strategic decision-making, not simply as a risk reporting system for regulators. To get the most value out of these risk management tools, insurers need to make sure they are embedded across their organization and controlled centrally by a qualified IT team.
To support this kind of enterprise approach to risk management, and be ready for IFRS 17, you’ll need a system with the following attributes.
Above all, you need to start thinking about all of these requirements right now, as risk management systems can not be installed overnight. What’s more, an enterprise actuarial solution will help you deliver constant business value across the whole spectrum of actuarial and risk analysis – from product pricing, valuations and ALM projection to driving five-year business plans.
In other words, regulation is just one reason to upgrade your risk management system today – and you should never underestimate the impact an enterprise solution could have on managing your business. Don’t let IFRS 17 be a shock to your risk system and prepare to achieve more than just compliance.
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