With regulatory changes lined up left and right, you’d wonder how companies are playing catch-up. The new accounting standard for insurance contracts, for instance, could leave insurers scrambling to be all-systems-go by 2021.
A global survey of 240 insurance firms found that 92% have yet to put their IFRS 17 solutions in place. With change programmes expected to run between 12 and 30 months, it’s important to note that 78% of companies are still in the early research and impact analysis stage of the process.
The first bi-annual Global IFRS 17 Readiness Assessment Report (GIRA), published by Aptitude Software, also showed that 84% of respondents have a disparate actuarial environment that’s hindering the delivery of consistent calculations. New processes to support IFRS 17 disclosure requirements would be necessary at 88% of companies.
“IFRS 17 is the most significant change to insurance accounting that has ever taken place and is the latest of many pressures facing insurance CFOs,” said Martin Redington, chief technology officer at the financial software specialist. “Insurance company profits are under duress as many sectors have become commoditised and many firms recognise the need to innovate their offerings and operations.”
Data from the GIRA report involved both life and non-life insurance companies, as well as insurers of all sizes including those with gross written premiums of over US$50 billion.
“In a post-IFRS 17 world, it will be difficult for CFOs to service the many financial and regulatory requirements without an approach that centralises control of reporting and financial data,” added Redington. “IFRS 17 is already proving to be the straw that broke the camel’s back, driving insurance CFOs to modernise their financial systems.”