Shared from the Tue 17 Jul, 2018 - Financial Review Digital Edition

The new world of insurance reporting


New regulations will radically change the way insurers will have to measure and report on insurance contracts. Left: Consulting partners at Deloitte Consulting Pty Ltd Australia, Tony Trewhella (left) and Thierry Lotrian.

It sounds counter-intuitive: a reporting standard to manage a global compliance headache that can give you more than it costs.

The reality is by having to gather the data that was formerly locked away in sub-ledgers and contract systems, so our regulators can compare like with like globally, will let you layer on analytics and create visualisations to become a truly insightful organisation.

As we know, few good things come without hard work. Getting ready for the new International Financial Reporting Standard 17 standard will be onerous, but it will provide insurers with a valuable data resource.

Caroline Bennet, who leads the Deloitte Actuaries and Consultants business, says a typical insurer today will have a heavy reliance on manual processes and tools within its end-to-end financial reporting process. This will not be sustainable with the demands of IFRS17 disclosures and hard-close deadlines.

The new regulations will require a significant overhaul of financial and actuarial systems, processes and accounting and disclosure policies. It radically changes the way insurers will have to measure and report on insurance contracts.

Deloitte has been working with Anaplan to create a solution that will provide insurers with the ideal tool for mining data and supporting the new regulatory reporting requirements.

Thierry Lotrian, a consulting partner at Deloitte, says insurers should see the new reporting standard as a rare opportunity to reinvigorate their businesses.

‘‘The issue with the insurance industry is that so far every single market has different ways of reporting their financials,’’ Lotrian says.

‘‘And IFRS17 is solving the problem by providing a harmonised view of disclosing the financial statements, so that a financial regulator can compare an insurance company in Australia with an insurer anywhere else in the world.’’

Compliance will be a datahungry process, and leveraging all the effort spent to assemble the data for compliance purposes, the data will become a valuable resource in itself.

At the most general level, compliance with the new standard will enable firms to take a clear look at themselves, Lotrian says.

‘‘I think that’s going to help insurers have a consistent approach to reporting their financials, which will also help them benchmark themselves against the best insurers in the world,’’ he says.

‘‘It’s an opportunity, to comply, drive better performance as well as understand the way they can operate better.’’

In this way the advantages go much deeper than just the output of the compliance process.

Tony Trewhella, also a consulting partner at Deloitte, says that even though the implementation date January 1, 2021, is still two and a half years away, there is no time to lose.

‘‘I think that insurers should start as soon as possible to run their initial PAA/BBA assessments, and they should also be, as part of the assessment, looking at a Unified Data platform to support the large volume of data required to support the regulatory requirements.’’

‘‘In the past the level of detail required for IFRS17 was locked up within sub-ledgers and contract systems, and nobody could really get to it for insight purposes.

‘‘Now that they’re forced to unify that information, they can put layers of analytics on top of it, and can start to really be an insightdriven organisation,’’ Trewhella says.

Deloitte believes its Anaplan apps supported by a Unified Data Platform is well-placed to satisfy the need for an IFRS17 solution.

‘‘As a true cloud platform, organisations can adopt it quickly. It gives access to a range of other apps, including insurer-specific solutions, such as the Own-Risk and Solvency Assessment (ORSA) developed for Europe-based insurers, the Profitability and Cost Management app or the Planning and Budgeting app, all using a common platform,’’ Trewhella says.

‘‘And all of these apps are connected, using a common data model,’’ he continues.

‘‘So once you have one app available you are able to use the existing data model across applications.’’

Cameron Price, consulting partner at Deloitte, responsible for such data platforms explains that IFRS17 has a fundamental impact on the data that supports the actuarial and finance functions.

As opposed to previous IFRS determinations, the granularity, transparency, and holding criteria of IFRS17 means that existing finance systems are not sufficient.

Insurance companies are already taking the opportunity to digitise their organisations while gaining compliance as that data becomes available via the compliance activities. This greatly increases the return on investment for the overall compliance exercise.

The differentiator for the Deloitte IFRS17 Anaplan solution is the involvement of the Deloitte actuarial team. The actuarial team have co-designed and stress-tested the models to bring its IP to life within the technology.

With the app’s global launch due later in August, the feedback from early testing along with its solution development road map, will enable Deloitte and Anaplan to support a new era of insight driven capabilities in addition to regulatory compliance in the insurance industry.

IFRS17 is providing a harmonised view ... so that a financial regulator can compare an insurance company in Australia with an insurer anywhere else in the world.

Deloitte consulting partner Thierry Lotrian

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