The year of recalibration: How insurers can take advantage of investments already made in IFRS 17

Rigorous new requirements ushered in by International Financial Reporting Standard 17 (IFRS 17) have forced insurance carriers to make significant investments over the last few years. IFRS 17 is a comprehensive, pervasive change affecting finance, technology, actuarial and all lines of business. Because of its scope, many organizations have only achieved a minimum viable product level of compliance.

As we move further into our first fiscal year under IFRS 17, how can organizations gain efficiencies from the investments they’ve already made? How can they take advantage of the massive amount of granular data they now have to evolve their systems and processes, win new business and gain competitive advantage?

We explore three priorities for insurers in 2023, a year in which strategic organizations will take the opportunity to recalibrate and differentiate themselves from their peers.

One of the biggest challenges we see in organizations that have reached minimum viable product compliance with IFRS 17 is general inefficiency. Manual hand-offs and approval steps add cost and time delays to finance and business operations—in addition to being prone to error. This is something to be corrected in a quickly changing economic environment in which acquiring additional resources continues to be a challenge.

The key will be building a culture of efficiency and embracing new ways of doing things. Leaders need to look at their operating structure and assess where they can use tools and technologies, many of which are already in place, to automate and streamline processes. And as updates to vendor IFRS 17 solutions are released, insurers will need to build a plan around how to manage version upgrades and testing to take full advantage of the latest functionalities.

IFRS 17 has provided stakeholders with a wealth of new information about the performance of their business. But as organizations gain access to additional new sets of data, they need to be able to understand the results and tell a coherent story about them to boards, investors and stakeholders that can be acted on in real time.

Unfortunately, with the accumulation of data that’s happened under IFRS 17, the process to drill down and explain results has lengthened for many organizations. Insurers need to make better use of the tools at their disposal to integrate data sets where it makes sense. The goal is to create automated customized dashboards to access data in real time, monitor and forecast changes in key performance indicators and drive other business outcomes, such as capital deployment.

How does this work in practice? Let’s say an insurer is looking at results in a dashboard and notices a non-favourable movement in liability. When the organization has a process in place that allows them to pinpoint exactly what’s going on and, more importantly, why, leadership can act immediately, saving time and costs.

Both the ability to leverage existing technologies to get better control over internal processes and to make data-driven decisions in real time hinge on the ability of your people to understand the capabilities of new tools and processes. Leaders must equip their people not just to use technologies, but also to experiment with and innovate around what they can use them to achieve.

There’s no doubt as to the complexity of IFRS 17, and leaders need to make sure there’s enough customized, IFRS 17-specific training material and resources to allow their workforce to do their jobs. This includes both those who were involved in the IFRS 17 implementation and those who were not.

We know 2023 will be a year of learning for many insurers, and organizations will need to make sure they upskill their people and work with the right specialists to enhance their processes and policies.