What are the organizational impacts of IFRS Insurance?
IFRS has a dramatic impact across the organization. Deloitte member firms use a four dimensional assessment to describe the impact of financial reporting changes on an insurance business. The dimensions are:
We look at the fourth dimension - Infrastructure and highlight the key impacts
- Maximize economies of scale, creating an integrated solution across functions – The arrival of the new IFRS Insurance rules and the reform of insurance solvency rules (e.g. the EU Solvency II reform) bring consistency in measuring profit and capital that offer major opportunities to increase operational effectiveness through the integration of finance, risk and actuarial functions
Process, Systems, Models and Data:
- Manage the impact on legacy processes, systems and data – The adoption of the new IFRS Insurance requirements demands an extensive restatement of data associated with past performance. The reconfiguration of systems to cope with this exercise and to set the foundation for a new data management strategy going forward is a key step that should be planned at the earliest possible stage to ensure a smooth implementation trajectory and maximum benefits.
- Realize cost efficiencies from enabling sustainable infrastructure solutions – The significant investment in Solvency II infrastructure is a fact that most European insurer have to face. The need to safeguard this asset against the overlapping requirements from the IFRS Insurance reform should be an imperative for all insurers during 2013 as the final draft of IFRS Insurance requirements are published and the timelines for adoption of all the new regulations is hopefully clarified. The equally material benefit of a less expensive IFRS Insurance implementation is available to those who will move early enough to seize these strategic synergy benefits.
Question: Is it a Technical Challenge?
Answer: Yes, but not only that. The implementation of a new financial language to measure business performance has pervasive ramifications across the operating model of an insurer