SAP
SAP IFRS 17
With change comes opportunity

 

The new requirements under IFRS17 that all insurance data needs to be consolidated in a format that provides accurate insights into contract valuations, risk assessments, and balance sheet implications - demands a process of digital transformation. 

IFRS17 Overview

 

IFRS17 has been in the works for a while and was published in May 2017, with the full force of the standard coming into play by 1 January 2021. (now moved to 2022). Essentially the goal of IFRS17 is to improve the status of financial reporting across the industry to provide more certainty and comparison to investors, regulators and the public.

 

IFRS17 relates specifically to the valuation of insurance contracts where the application of different accounting standards has led to a wide array of representation in financial statements.   The scope of this standard ‘applies to insurance contracts issued, to all reinsurance contracts, and to investment contracts. Basically, it aims to provide more transparency and comparability to build investor confidence. Essentially, IFRS17 will make it easier to see the profit, loss, risk and liabilities in a complex insurance landscape.

 

With the current IFRS4, the heart of the issue is that the myriad different accounting policies make it difficult to gain clarity on what is going on inside the business. Ultimately, it’s like comparing apples with oranges. What this means for the insurance industry is that it is now necessary to bring together leaders from Finance, Actuarial and IT functions to work together to overcome one of the biggest accounting changes yet. 

 

Despite the challenging time ahead, by understanding a well-designed and proven process of transformation ahead of the IFRS17 deadline, insurers can create effective data models that will enable the activation of predictive capabilities in the insurance offerings.

IFRS 17 with the new SAP Financial Products

Darrel Orsmond, Head of FSI at SAP Africa

"It is our view that any compliance requirement is also a potential opportunity for business transformation. The mere act of compliance – especially in the case of IFRS17 – requires a rethink of certain systems and processes. Using this opportunity to build greater agility, streamline processes and increase efficiencies can have far-reaching benefits for years – even decades – to come."

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