Regulations and Reporting Standards

Reporting poses a significant challenge for companies. Over the years, their obligations have increased while the time to fulfill them has shortened. In this complex environment, actuarial valuation plays a crucial role, involving precise calculations of technical insurance reserves, cash flow projections, and financial risk analysis in compliance with regulations such as IFRS 17 and Solvency II. The growing number of obligations and shortened reporting deadlines make efficient, automated solutions with reliable risk control mechanisms essential for the effective and compliant execution of the actuarial valuation process.

Our Expertise

Deloitte is known for its expertise in accounting and financial reporting. Our AIS team offers IFRS 17 implementation and compliance services. These services may include consulting on the impact of IFRS 17 on financial statements, assistance with data collection and analysis, development of new accounting policies and processes, and training for finance teams.

Execution Strategy

• We develop comprehensive IFRS 17 calculation and reporting solutions.
• We create, develop or comment on IFRS 17 methodology.
• We design and implement processes for IFRS 17 or optimize to improve stability, efficiency and control.
• We design and set up IFRS 17 solutions in Finevare (Deloitte’s in-house developed software for IFRS 9 and IFRS 17 compliance).
• We create and develop IFRS 17 models in Prophet modelling system.
• We help create disclosures, analyse and visualise the results.
• We prepare financial plans and forecasts that comply with IFRS 17 requirements.
• We help set IFRS 17 key performance indicators (KPIs) and compile management information.

Business Impact

• Reduced compliance risk: proven methodology of performing IFRS 17 calculations.
• Optimized reporting: streamlined processes deliver time savings and cost efficiency.
• Minimized operational risk: automated calculations and a robust control framework enhance reliability and reduce manual errors.
• Enhanced decision-making: free up valuable resources to focus on advanced analysis and strategic insights.
  
  

Our Expertise

Solvency II is now a well-established reporting standard and it may seem that it has become ‘business as usual’ that needs not to be invested in. However, our experience has shown that this is not the case. Sometimes, tools are inefficient, processes are complex with a history of ad hoc changes implemented without considering the efficiency or speed of processing. The Directive itself is subject to changes that companies should be aware of. And finally, there is a question that companies should answer: do we use the available measures to optimize our capital requirements?

Execution Strategy

• We review risk management strategies, policies and measures.
• We perform BEL, Risk Margin and SCR calculations and improve their efficiency.
• We provide consultation on planning, creation, documentation, and validation of internal models.
• We validate economic balance sheets and SCR calculations.
• We validate Solvency II best estimate liability as required by the regulations .
• We provide consultation on implementation of specific parameters (USP) for SCR calculation.
• We help implement internal models.

Business Impact

• Reduced compliance risk: verified methodology ensures accurate and consistent Solvency II calculations
  
• Enhanced risk management: improved processes supportoptimal capital requirements
  
• Optimized reporting processes for time savings and cost effectiveness
  
• Minimized operational risk with automated calculations and robust control framework
• Valuable resources freed up to perform more advanced analysis for better decisions.

Our Expertise

Experience studies, calculations and the assumptions-setting process can be reviewed, automated and optimized.

IFRS 17, Solvency II, local statutory reporting and profit testing require multiple assumptions, often with different levels of granularity. When setting these assumptions, we should avoid effort duplication. With heightened reporting requirements, calculations have become more complex, the risks in the process increased and expert judgments that are relied on can easily lead to confusion. Changes in assumptions drive fluctuations in IFRS 17 profits and KPIs, so all unnecessary changes should be avoided, and risk of errors – minimized. It is important that we free up valuable resources to perform analytical work rather than repetitive calculations and model updates. Any changes in assumptions and their impact on financial performance needs to be communicated clearly across the organisation and to the management.

Execution Strategy

• We identify all relevant assumptions along with their priorities.
• We automate calculations and model updates.
• We implement a framework where the decisions to change assumptions are supported by objective statistical measures to rule out random fluctuations.
• We clearly separate standard calculations from grouping decisions and expert judgments to improve transparency.
• We implement a single process for assumptions made for different purposes and with different levels of granularity to ensure consistency and time savings.
• We improve documentation, providing the reasons for expert judgments, to streamline communication and ensure compliance with EIOPA guidelines.
• We design and implement impact assessments to ensure that the effects on the financial statements are communicated early on .

Business Impact

• Time savings, increased cost effectiveness, automation of repetitive tasks
• Robust control framework, regulatory compliance.
• Minimized operational risk and key person dependencies
• Transparent decisions, more stable assumptions that do not need to be changed due to random fluctuations; better and faster management information
• Consistent assumptions used for different purposes for better decisions.
• Improved communication between different departments.
• Deeper insights into customer segmentation and behaviours.

Our Expertise

Regular reserve validation is required under Solvency II. However, it is also beneficial to the company and to the actuary to have the calculations and methodology reviewed by an independent expert. Unlike in an audit, where knowledge and experience are shared to a rather limited extent, in reserve validation the management and the actuary have an insight into the results and are given access to independent opinions, experience and best practices.

Execution Strategy

• We engage seasoned actuaries with excellent knowledge of market practices to perform the reviews.
• We focus on selected areas or perform a holistic review, depending on our client’s needs.
• We provide regular reviews or help our clients gradually optimize the process in a longer perspective.
• We offer independent recalculations of the results or reserve recalculations using alternative valuation methods.

Business Impact

• Review of reserving policies and calculations.
  Result validation
• Suggestions for improvements in efficiency, methodology, documentation
• Advice on control framework and process risks
• Collaboration for improved efficiency and minimized risks in the process

Our Expertise

Our actuaries will work to carry out an internal audit of the actuarial function. While internal auditors may lack the actuarial expertise, which may be necessary to fully assess the risks and controls in the actuarial processes, our team can support them in their work.

Execution Strategy

• Our professionals join your internal audit team and follow your audit methodology.
• We provide our opinion on the actuarial processes and advise how to address gaps, if identified.
• We suggest controls and procedures to be implemented, if so desired.
• We perform an internal audit of the actuarial function using our own methodology, if so desired.

Business Impact

• Experience and actuarial expertise provided to the internal audit function
• Advice on best practices and suggestions how to fix deficiencies, if identified
• Seasoned actuaries with vast experience in internal and external audits

Our Expertise

One of the core services provided by Deloitte is external audit. Whenever necessary, our actuaries partner with the audit teams to help them with their audit engagements. We provide our services under various reporting bases (IFRS, Solvency II, local GAAP, US GAAP).

Execution Strategy

At Deloitte, we work closely with one another to make sure that no matter how complicated the process, our client’s experience is swift and seamless. This is possible with our focus on timely, clear and honest communication.

Business Impact

• Experienced professionals quick to understand various methodologies
• Coordinated, consolidated data requests that minimize duplication and client workload
• High-quality audit findings and audit reports