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Date: 25/02/2019

Title: Nimble IFRS 17 Reporting and Impact Assessment

Teaser: IFRS 17 will take effect in 2022, establishing internationally consistent accounting standards for insurance contracts. In order to fulfill the requirements, insurers must assess several methodologies. This assessment includes data collection and handling.

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Nimble IFRS 17 Reporting and Impact Assessment

IFRS 17 will take effect in 2022, establishing internationally consistent accounting standards for insurance contracts. In order to fulfill the requirements, insurers must assess several methodologies. This assessment includes data collection and handling.

Authors: Daniel Diederichs | Dr. Daniel Trzesniak

The financial services industry is undergoing a reporting revolution due to the new international reporting standard (IFRS 17). IFRS 17 requires financial service firms to publish detailed and accurate financial reports in a timely fashion. This is a major departure from past reporting practices, where the firms could afford the high cost of gathering data, running analysis and issuing reports based on nonintegrated systems.

New reporting requirements

To meet the new reporting requirement, such data must be collected, analyzed and disclosed in a matter of days. The data should also be as current as possible. Insurers have to be ready to iterate and modify models immediately. The recipients of the reports – whether auditors, shareholders, clients, regulators or institutional investors – may ask for rapid slicing and dicing of data in many different ways.

It is nearly impossible to anticipate all their questions and prepare all dataset combinations supporting the answers beforehand. The functionality needs to be dynamic, so dataset can be viewed immediately. This accelerated reporting time, the need for current data and the requirement for flexible modeling and iteration are behind this reporting revolution for insurers. It also demands that the industry rethinks its data gathering and reporting processes as well as the tools that support it.

The old school way

«But we’ve always done it this way.» No doubt those words have been uttered at many insurers since the reporting revolution began. But the old school way of generating financial reports is no longer appropriate. The time and effort required to gather data across the organization for reporting have become too much.

«Insurers have to be ready to iterate and modify models immediately.»

Consider all the steps related to the old data management and reporting process:

  • Develop the architecture. This likely entails the gathering of data from many different systems and business units. It also involves many different owners, sometimes via a data feed but often via a manual process.
  • Define the models and underlying calculations that will be used based on the required reports.
  • Design and build out the software to implement the architecture, collect the feeds, perform the required calculations and generate the reports based on predefined models.
  • Code, then code some more.
  • Activate the systems and process and generate the reports.
  • Go back and troubleshoot and write more code if all fails to work as desired.
  • Document the whole process, end-to-end and generate a customized report for many different audiences.
  • Ensure that everything has an audit trail and is properly versioned.
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Fig. 1 Implementation of IFRS 17 in four weeks

A software project like this will likely take many years before it achieves the desired outcome. And many of these projects fail altogether and require starting over from scratch.

Once the reporting system is in place, just running regular reports is a lengthy process. This is due to the varied data sources; inconsistent methods of data collection and extraction; the slow process of data validation; as well as any needed reworking. There is also the possibility that the model changes or that a new report is needed requiring the retooling of the inputs with different granularity. This redesign of the system leads to yet another round of heavyweight development and coding.

«The functionality needs to be dynamic, so dataset can be viewed immediately.»

The reporting revolution is placing entirely new demands on this outdated model. Especially around data management, many companies still rely on a dated tech stack, using data feeds from many systems to be assembled in a central database. This concept can no longer cope with modern data requirements. It also does not take into account the extraordinarily high costs of these software projects, especially when they go wrong and must be corrected. In short, such old school projects mean that business managers must spend too much time supporting the software system buildout, instead of focusing on business content.

Nimble data management for swift reporting

Synpulse has teamed up with Systemorph to bring insurers a sophisticated approach to data management and reporting under IFRS 17. The new approach uses Systemorph’s IFRS 17 solution to accelerate data collection, simplify reporting processes and streamline calculation and analysis. The result is nimble data management producing agile reporting for IFRS 17 compliance.

Together, Systemorph and Synpulse provide workable software for data management and reporting within weeks rather than months or years as in traditional software development. In doing so, they have helped companies to adopt modern approaches to financial data management. The difference from the old methods is vast and helps insurers accelerate implementation of their reporting process under IFRS 17 in an innovative, trouble-free manner. Additionally, the ability to rapidly iterate, modify models as well as use modern software and the cloud for calculation and report generation means that the data management process is much more flexible than a traditional one bound by rigid specifications. Now you can conduct stress testing, sensitivity analysis, variable modification without breaking your models or being constrained by fixed specifications. Harnessing such modern software technology also means that insurers will benefit from shorter development and implementation times as well as lower development and maintenance costs.

Reporting reinvented for IFRS 17

The Systemorph IFRS 17 product utilizes the cloud-enabled «Software-as-a-Service» functionality of the Systemorph «Vertex» platform. This provides powerful yet simple features and functions for creating models, integrating data feeds, calculating outputs and generating reports. The product combines data-gathering workflows, a master data hub, a calculation engine as well as analytics and visualization tools into a single solution. It supports an end-to-end business process that centralizes data control while distributing data management tasks. The product provides users across the entire reporting process with intuitive data management tools that are as simple as using a smartphone app.

The interface also standardizes the data reporting and validation processes, ensuring data is collected very quickly and validation is smooth and simple. As a result, data is current and accurate at all reporting and analysis levels.

The system enables the insurer to easily adopt the models and valuation methodologies identified by the IFRS 17 standard. This includes the «building block approach», the «premium allocation approach» and the «variable fee approach ». The Vertex platform technology was developed hand-in-hand with the agile development process and serves as its underlying foundation.

Many insurers looking to comply with IFRS 17 no longer have the appetite for long and expensive software build-out and customization projects. Instead, the Systemorph and Synpulse approach brings modern software, cloud technology and advanced deployment techniques to form a highly-efficient IFRS 17 reporting process. This allows business managers to focus on their business rather than on software systems or the project needed to build them.

IFRS 17 solution foundation in four weeks

Synpulse’s finance, accounting and actuarial knowledge as well as deployment experience enable the Systemorph product to quickly become operational. In fact, we built a live system using real data in just four weeks for several clients (see fig. 1). That means an insurer’s business managers can explore their modeling and reporting ideas in working software rather than trying to plan abstractly with diagrams or long documents. Our solution lets business managers see their methodologies come to life, allowing them to analyze and refine them in real time. Rapid iteration enables managers to make the right choices for modeling and calculation without setting their decisions in stone.


Key Features of Systemorph Vertex:

The platform revolutionizing data management

  • Data modeling
  • Unique data versioning & automated audit trail
  • Integrated business process workflow
  • Central data storage incl. historization & restatement
  • Interactive reporting with drill down & visualization
  • User friendly mobile interface
  • Enterprise integration
  • Highly scalable platform using «AZURE» Cloud
  • Customer-proven

Contact

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Daniel Diederichs

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