Legerity's CEO Jeremy Wood and COO Stuart Eden explain how Legerity offers insurers a fast, reliable and scalable way to implement the IFRS 17 accounting standard, as well as offering wider solutions for finance transformation.
What challenges do insurers face in implementing IFRS 17? How do these differ for small and large insurers?
Jeremy Wood: We see data as the single biggest challenge to address in an IFRS 17 implementation.
Generally, insurers need to provide new or additional data from their actuarial platforms, which can be time-consuming and complex. While larger insurers usually have more resources at their disposal, their requirements are more complex and difficult to manage.
In the larger insurers, we are seeing the inclusion of an enterprise-level data lake as a core part of the IFRS 17 architecture. In many cases this is still a work in progress and firms are using IFRS 17 as a catalyst to build out their data lake strategy.
In smaller insurers, there is often the use of a data staging layer, but as they typically have fewer source systems it is not as essential as in the larger firms.
Data is always a challenge in accounting change and enterprise IT programmes and IFRS 17 is no different. Luckily, for those insurers who are at an early stage, we have a well-defined data API that helps to simplify many of the challenges of data integration.
How can Legerity help insurers implement IFRS 17?
Jeremy Wood: For insurers just starting out on their IFRS 17 journey, we can offer a fast-track route to IFRS 17 compliance with our recently launched FastPost Express for IFRS 17 solution.
FastPost Express is a pre-configured, out-of-the-box, SaaS version of our IFRS 17 solution. It is designed for insurance firms with smaller IT departments, limited budgets or those that have not yet started their IFRS 17 implementation. It covers all the finance aspects of IFRS 17 from receipt of cash flows through to the posting of journals and production of IFRS 17 reports and disclosures.
In addition, for firms that are struggling to implement a one-size-fits-all solution across all their entities, we can offer a hybrid approach with our scalable FastPost Express solution for the smaller and medium size entities.
Has Covid-19 impacted the progress of insurers' IFRS 17 projects?
Stuart Eden: Remote working has made delivery more challenging, but it is amazing to see how adaptable project teams have become, and how effective they can still be while working virtually.
Testing is perhaps the most difficult aspect, where problem-solving would be quicker and easier with co-located teams. However, even this aspect has improved as people adapt to new working approaches and adopt collaborative cloud-based testing tools.
As a cloud native vendor, Legerity was well prepared for the transition into lockdown and we are pleased to report that there was no disruption in service for any of our clients.
As insurers' IFRS 17 projects approach the parallel run phase, what feedback are you receiving?
Jeremy Wood: Many programmes are reaching parallel runs in the early part of 2021, so it is still too early to have a clear view.
Those that have, or are about to start, are using the exercise to bed down their end-to-end operational processes, and to compare the output with their original impact assessments. This will be the primary focus until insurers go into transition and comparatives in 2022.
However, many of our clients are starting to look at future finance requirements that they can leverage the Legerity FastPost platform for, including IFRS 9, US GAAP and LDTI, plus wider finance transformation and business improvement initiatives.
How will IFRS 17 improve the insurance business?
Stuart Eden: Comparability of results across the industry is the main goal, and we see this being achieved through the new standard.
IFRS 17 is a significant investment in the back office and is creating a platform that insurers can leverage for operational improvements and to enable digital innovation in the back office.
The standard may also force insurers to reconsider certain practices, such as subsidising new business to meet revenue targets, due to more transparent accounting for onerous contracts.