Chris Seekings | The Actuary | May 9, 2018<\/p>\n
The overwhelming majority of UK insurers believe the incoming reporting standard IFRS 17 will be more costly than the Solvency II directive, new research has found.<\/p>\n
A survey of senior insurance professionals by analytics firm SAS has found that a whopping 97% expect IFRS 17 to increase the complexity and cost of operating in the industry.<\/p>\n
Approximately 90% are preparing for costs greater than those incurred by Solvency II, with 93% predicting that the reporting standard will completely change their business models.<\/p>\n
“UK insurers must not wait excessively for a clearly defined interpretation of what IFRS 17 compliance means,” SAS UK & Ireland head of risk business solutions, Lee Thorpe, said.<\/p>\n
“The changes are significant and will change the face of financial reporting. Insurers should be prepared to start planning and considering their options early.”<\/p>\n
IFRS 17 takes effect on 1 January 2021, and is expected to usher in a significant transformation for insurance companies, encompassing all areas of financial reporting.<\/p>\n
Despite insurers preparing for significant costs, it was found that 92% believe IFRS 17 will improve financial transparency, with 87% believing it is “crucial” to the survival of the industry.<\/p>\n
Approximately 97% think the standard will result in improved processes and automation, while the same number believe it will help them modernise their financial systems.<\/p>\n
Almost all said they are confident they will have achieved compliance before the enforcement deadline, with 61% already starting preparation for the changes.<\/p>\n
However, most insurers say their current systems are not up to the task and are preparing for major alterations.<\/p>\n
Data management systems will experience the greatest upheaval, with 84% planning to upgrade or replace them, while accounting and actuarial systems will also see significant change.<\/p>\n
“Insurers should adopt an iterative approach to compliance and 60% are planning a tactical strategy before refining the solution closer to the deadline,” Thorpe continued.<\/p>\n
“Systems and processes with a strong emphasis on data management and governance will be crucial, and preparation for IFRS 17 may see the aggregation of existing data sources into one platform to centralise data.”<\/p>\n","protected":false},"excerpt":{"rendered":"
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