The new standard IFRS 17 is effective for annual reporting periods beginning on or after 1 January 2021. With it, investors from anywhere in the world are able to understand and compare the financial positions and performances of companies that issue insurance contracts in any country. Insurers, however, are divided in their opinion on IFRS 17 adoption, with many fearing that costs will increase significantly at the onset.
Although finance and actuary are the two most obvious areas affected by IFRS 17, they are not the only ones. Due to the fundamental changes introduced, insurers will also see impacts across people, processes and technology.
What do to then? We believe a wait-and-watch stance will result in delays in finalizing the operating model and implementation plan, thereby running the risk of incurring even further costs associated with timeliness, manpower and quality of work.
Insurers will need to develop a target operating model to look at the impact holistically and address the gaps between the current and target state. This approach will help them to leverage existing architecture like Solvency II, overcome significant challenges due to the complexity of IFRS 17 and convert this into an opportunity to gain competitive advantage.
Our advice? Cognizant urges insurers to start a comprehensive financial transformation program early so as to achieve timely compliance, competitive advantage and future-proofing.
Download this white paper to identify the areas impacted by IFRS 17 across the insurer’s business and lay out a comprehensive implementation approach. The paper also further discusses Cognizant’s capabilities, based on experience from many similar regulatory and transformation projects globally, that insurers can leverage for successful implementation. You can also read more about Cognizant's offering and current trends within the insurance industry.