Late last month, we held a successful IFRS 17 event in Budapest for our people in the EMEA region. Over three days, 150 colleagues convened to share insights from across countries and clients. Reflecting on the priorities of our clients right now, I see three distinctive waves of IFRS 17 activity in the market.
Wave 1: Getting over the line
We’re working with many clients, including some as their auditor, to ensure they meet their HY23 reporting requirements, particularly where IFRS 17 is effective. We’re also supporting design and implementation activities where the Standard has been deferred. For those reporting soon, now is the time to finalise key performance indicators, implement workarounds and review operational readiness. Jignesh has recently produced an excellent blog on HY23 market reporting.
Wave 2: Remediation and recalibration
For those with systems and processes that require improvements, new programmes of work can optimise a number of key areas and create value from investment into IFRS 17 transformation:
- Solution architectures can be enhanced through the removal of workarounds, the implementation of deprioritised systems and improvements in data quality.
- Operating models can be optimised through actions like decommissioning IFRS 4 processes, redesigning team structures and increasing process and control automation.
- Finally, reporting can be improved by reviewing internal and external KPIs and assumptions, collecting and actioning feedback on pricing and product design, and increasing the internal use of self-service reporting.
Wave 3: Finance transformation
Not every insurer wants to embark on complete finance transformation. We are, however, seeing some insurers look to complete their finance transformation after 3-5 years ago, while other insurers are looking to start after the IFRS 17 effective date. They want to evolve their state of compliance into a function that operates efficiently and delivers valuable insights to the business.
At the IFRS 17 event in Budapest, I heard great success stories from our partnerships with AWS, Microsoft, Oracle and Workday - to name a few. We have been helping insurers to rearchitect, adopt cloud-native applications and leverage artificial intelligence (AI). Cloud, when used effectively, can improve resilience, cost and capabilities of Finance teams.
Exploring AI, the team talked about large language models, such as ChatGPT, and their application to perform data analysis to identify new patterns and trends, generate code for reconciliations, summarise information, and draft reports in defined formats. Other methods could also improve the automated control environment - for example, dynamic credit control thresholds. There are risks to AI, especially in financial reporting, but there are plenty of opportunities to safely apply the technology for a return on investment.
For many, progress has been made and there is a lot to celebrate. We have been on a long, complicated compliance journey. Making accounting decisions, implementing new technology and finding the right talent is never easy. Depending on where you’re based and what wave you’re riding, there may be more work to be done to transition or create value.
