IFRS 17 has been in force for more than six months. The implementation of the standard poses a number of challenges for insurance companies. In our latest article, we explain in detail what is important and present efficient solutions.
The International Financial Reporting Standard – IFRS 17 which has been in force since 1 January 2023, regulates the recognition, measurement and accounting of insurance contracts in an internationally uniform manner for the first time. The implementation of the new regulations poses numerous new challenges for insurance companies.
We provide an overview of the impact on the areas involved in the accounting process and present efficient solutions from cleversoft.
The requirements of IFRS 17 significantly increase the scope and granularity of the data required. For example, the aggregated figures in the balance sheet and the profit and loss account (P&L) must be explained in detail by means of extensive information and detailed reconciliations in the notes. To ensure this, all source systems need to be optimally coordinated. However, since many companies use different accounting systems with different data structures, the first step is to standardise the data.
Our easy-to-use SaaS service enables you to reconcile all the necessary data with minimal effort.
cleversoft’s solution automatically standardises data from different systems and efficiently provides all the information and values required for IFRS 17-compliant accounting.
Due to the principle-based nature of IFRS 17, methodology plays a fundamental role. Detailed analyses of insurance contracts and complex calculations including actuarial assumptions and models are necessary to meet the requirements of the standard.
cleversoft’s IFRS 17 solution uses the latest technologies and best practices to help you streamline your reporting processes.
For example, our tools use pre-configured models, for risk adjustment or CSM and LC amortisation. ln addition, our tool offers the capability to evaluate the sensitivity of critical assumptions and their effects on financial performance. Some of the scenarios are predefined in the system, others can be customised by the user.
Our solution also delivers built-in KPIs and management reports providing valuable insights into a company’s financial performance.
The calculation process for IFRS 17 is undeniably intertwined, especially for the GMM and VFA models. But even simpler elements such as PAA require numerous formulas to be executed correctly. Establishing a controlled environment with well-defined process flows is fundamental to avoid missing key outputs or inputs. Even minor errors can have a significant impact.
The innovative cleversoft tracking system allows you to easily compare versions and provides full transparency of any changes made.
Our commitment to accuracy is demonstrated through our transparent logging system. We log every change made to the data, providing a comprehensive audit trail.
Our validation system is designed to check the accuracy of data throughout the entire reporting process, enabling us to identify mistakes at the earliest possible stage. As older data sets may also be relevant, we keep them available for an appropriate period of time. All data and backups are stored in a highly secure cloud with restrictive access and reviewed by auditors from different regions.
Actuaries now have a crucial role in helping accountants and management understand the value presented in financial statements- particularly for the GMM model. Effective coordination and communication are essential to meet strict deadlines. The increase workload may require companies to allocate additional resources.
cleversoft’s tools perform most of the work and minimise the need for additional resources.
Users of our solution can focus on preparing inputs and reviewing results. cleversoft’s IFRS 17 solution enables parallel work and fully covers all calculation processes. All outputs are available at the press of a button. The validations developed by our actuaries and accountants based on extensive business knowledge help to complete the close the review process quickly. Manual data extractions and analyses are not necessary as all data is available.
Another challenge is to maintain coherence of financial reports with past performances for external stakeholders.
This is because, despite the new IFRS17 standard, the business that you are running is likely to remain the same as in previous years. Therefore, it is important to develop new key performance indicators (KPIs) and narrative reporting that reflect this continuity and align with your core values.
Core metrics such as the combined ratio need to be consistent with past performance and provide an accurate picture of your company’s financial situation. This requires a deep understanding of the underlying data and a strategic approach to identifying the right metrics.
cleversoft’s IFRS-17 solution offers predefined KPIs based on the latest market developments.
Our KPIs are available for different aggregation levels and can be broken down to portfolio level by users.
The implementation of IFRS 17 is highly complex and can quickly overwhelm a company’s resources. By partnering with cleversoft, you can efficiently reduce your company’s workload. Our comprehensive solution will help your company to automate data exchange, correctly apply accounting models and provide a complete sub-ledger, including disclosure reports. To ensure accurate and efficient application of the reporting standard, our data capture models are flexibly customisable.
Free yourself from the burden of complex IFRS 17 financial reporting and unlock new opportunities for your business. We will be happy to advise you on the details.
To ensure that you can get a system up and running quickly and focus on finding data and starting reporting, we would like to invite you to our FREE webinar on 11 July at 10 am CET.