Increased collaboration will be needed for many reasons. These include:

• Experience adjustments: ‘Expected cash flows’ are typically in the actuarial realm, whereas ‘actual cash flows’ are in the accounting realm. Under IFRS 17 any difference between expected cash flows and actual cash flows has a direct impact on the P&L, as experience adjustments. In order to avoid unnecessary P&L fluctuations, the expected cash flow data and the actual cash flow data will need to be aligned.
• Insurance service revenue: Insurance revenue under IFRS 4 was an accounting figure. Insurance service revenue under IFRS 17 consists of expected (not actual) claims and expenses, the release of expected risk margins, and the release of contractual service margin (CSM), an expected profit margin. These are mostly actuarial numbers, but are affected by accounting topics such as currency conversion.
• Link between insurance contracts and investments: Under IFRS 4, insurance contracts were in the actuarial realm and investments in the accounting realm. Under IFRS 17, the link between participating insurance contracts and underlying investments, and the resulting accounting, have a larger impact on the financials. Getting both the accounting consistency and the investment strategy right requires a lot more consideration, by both accountants and actuaries.
• Disclosures: Disclosures are traditionally the responsibility of accountants, but they have become much more actuarial in nature. To give one example: the change in the Best Estimate Liability (BEL) needs to be disclosed in detail. The accountants will need the inputs from actuaries in order to understand and explain the change.

In the IFRS 4 closing process, actuaries are primarily responsible for the setting of actuarial reserves and their valuation. The accountants are responsible for the overall financial statements. For many companies, direct cooperation is required only when the actuarial postings to the general ledger (GL) need to be approved, and when exceptions require follow-up.

Insurers are currently designing their IFRS 17 target operating models. An important aspect of this design is how to ensure actuaries and accountants work together effectively and smoothly. We see insurers considering a number of different solutions:

• Integration of teams: Integrate the actuaries and the accountants into a joint Finance function.
• Additional team (‘joint taskforce’): Next to the actuarial team and the accounting team, form a third team (a joint taskforce), consisting of actuaries and accountants with the knowledge and experience to build bridges between actuaries, accountants, IT and other relevant teams within the insurer.
• Organise collaboration proactively: Keep the teams separate, but set up meetings during the closing process, with all the relevant actuaries and accountants.