Martin Sarjeant | head of risk solutions management and strategy, Insurance, FIS
March 17, 2020
As another year gets underway, another year’s delay hits IFRS 17. Given growing pressure over 2019 to push back the accounting standard’s introduction, we shouldn’t be surprised; and nor should we be sorry. The recently (and doubly) deferred deadline of January 1, 2023, is clearly good news for the world’s insurers.
In case you hadn’t noticed, IFRS 17 has presented the global insurance industry with a complex operational challenge. If the standard stays as it is, firms have a lot of work to do and face a long, hard road to compliance.
And while markets like South Korea have pushed admirably ahead with implementation, many others – from Latin America to the Middle East – are still struggling to kick off their gap analysis.
At FIS, with many successful implementations of the standard already behind us, we’ve been consistently aware of the time, energy and resources that IFRS 17 demands of insurers. That means another 12 months’ grace offers real opportunities to get the best from your implementation.
More specifically, there are three reasons why we should welcome the IASB’s latest announcement.1. More potential to add value
IFRS 17 amplifies the need for insurers to better integrate their finance and actuarial functions, and consolidate and modernize data management, systems and processes. Achieving these objectives represents a major step forward in adding value to the business.
In other words, insurers should view IFRS 17 as an opportunity to improve both reporting timelines and insight into business performance, as well as reduce operational risks by increasing automation and governance of the entire reporting process.2. Time for a phased approach
The delay will give you 12 more months to look beyond the minimum requirements of compliance and consider the additional investments that will provide greater business benefits.
In a phased implementation, insurers should first focus on data management and system updates that adopt the latest technological advancements and best practices. Next should come the layering of process automation and other governance initiatives, all in time for the new go-live date.3. Less of a scrabble for talent
The new accounting standard needs a multi-disciplined approach to meet the varying needs of insurers’ actuarial, finance and IT functions. The skills required are numerous and demand for them is already increasing – a trend that is unlikely to change.
We can all learn from the delayed introduction of Solvency II, which resulted in a rush on resources as the new, later deadline approached. Many firms had dispersed their teams when the delay was announced, and then had significant problems re-staffing their projects as they competed for their own, vendor and consultancy resources.
The moral of this story is that the delay to IFRS 17 isn’t an excuse to down tools. Instead, seize the opportunity to secure the right talent and skills while they are still available.Conclusion – Make the IFRS 17 Delay Your Reason to Press Ahead
One thing is certain – IFRS 17 is not going away. Neither are the underlying challenges of how to implement the standard and interpret its uncertainties.
So, while the delay is a cause to celebrate, it’s certainly no reason to pause.
But with a whole extra year to surmount the obstacles, insurers have a real chance to deliver greater business benefits from compliance, add maximum value and transform their operations for the better. That gives you all the more reason to start your implementation right away – and use every moment of the recently extended timeline.
And with IFRS 17 implemented more quickly, you can stay ahead of the competition, too. And that’s one opportunity you can’t afford to miss.