IFRS 17 Vendor Solutions Event. 4 October 2018

Transcription

1 IFRS 17 Vendor Solutions Event 4 October 2018

2 Agenda Agenda Items Speaker Introduction and IT insights from Survey Overview of impact on IFRS 17 requirements to data and systems Daniel Gaffney Joanne Lonergan Vendor Presentation Aptitude Coffee break Vendor Presentation SAS Vendor Presentation FIS Project Approach and Implementation insights Closing Comments David Walsh Daniel Gaffney Meet the vendors and coffee break 2

3 Introduction and IT Insights and Survey Daniel Gaffney

4 Data Staging IFRS 17 System Architecture and Implementation Phases Depicted below are the Implementation phases proposed to ensure successful IFRS 17 transition. On the right is the target E2E system architecture and the various components supporting an IFRS 17 solution, including high level data flows from source systems to the outputs for both internal to external reporting. This should aid insurers with the requirements and vendor selection phases of implementation. Impact Assess Data Sources Data Management Finance & Actuarial Tools Reporting & Analytics I m p l e m e n t a t i o n Planning Requirem ents Vendor Selection Detailed Design Build Test UAT Transitio n Parallel Run Go Live Policy data Claim data Reinsurance data Asset Mgmt. data Economic variables data Data Load & Transform Data Landing Area ETL Actuarial Models BECF engine Asset Liability Modelling Risk Modelling Scenario Generation Model Point Files Capital Management Source Data store IFRS 17 & 9 Calculation Engines IFRS 17 Discount engine RA engine CSM engine IFRS 9 Accounting Hub IFRS 17 Sub Ledger Data Foundation Results Data Store Governance, Policies, Processes & Controls General Ledger Master / Reference Data Management Finance Expense Allocation Consolidation & Elimination Planning, Budgeting and Forecasting Meta data, Reference Data Definitions, Data Standards, Hierarchies & Dimensions Process monitoring, Workflow Control, Integrated Data Validation, Data Security & Data Lineage Reports IFRS Financial Statements Statutory reports Management reports Disclosures Data Mart / Data Warehouse Analytics Operational reporting Management information Statistical analysis Operate 4

5 Common Technology & Data Challenges The transition to IFRS 17 will have a profound impact across the end-to-end IT landscape, including policy administration, claims and brokerage systems, actuarial system, reporting solution and ERP GL platform. The impacts will be both functional (new functionality and extensions) and technical (storage and capacity) in nature. In some cases, new applications will need to be introduced into the IT landscape. Technology Data Challenge Impact* Challenge Impact* 1. Changes to source systems High 1. Greater data granularity across end-to-end architecture High 2. New integrations and impacts to existing infrastructure High 2. Missing or incomplete data to support historic data High 3. New actuarial models and IFRS 17 calculations High 3. Data model inconsistencies across finance and actuarial systems High 4. Chart of Accounts impacts and changes to accounting rules High 5. Updates to cost allocation process Medium 6. Need for Production/actuals data for testing Medium 4. Non-standardised source system data High 5. Increased pressure on period close processes High 6. Greater need for reconciliations and data auditability Medium *Degree of impact and ability to meet IFRS 17 Requirements 5

6 IFRS 17 Survey Results With what aspects are you struggling in preparing your technology solutions to support IFRS 17 compliance? Select all that apply. (Excludes I don t know responses. Percentages do not total 100 due to overlapping responses With what aspects are you struggling in implementing your technology solutions to support IFRS 17 compliance? Select all that apply. (Excludes responses of less than 2%. Percentages may not total 100 due to overlapping options.) Capturing data inputs across functions Calculation capabilities Performance issue of technology solutions Reporting interface Data storage/management capabilities User interface Cyber security Budgeting enough resources for IFRS related technology solutions Finding the vendors with technology solutions we need Overcoming cultural inertia Having time to implement new technology solutions Designing appropriate technology solutions Ensuring adequate cyber security Ability to provide sufficient staff time to deliver the change Ability to deliver in parallel existing programme commitments Integrating operations (i.e. finance, risk management, actuarial) to optimise the use of new technology solutions 6

7 IFRS 17 Survey Results To what extent do you feel your financial reporting administrative and/or actuarial systems need to be changed to meet the requirements of IFRS 17? (excludes the percentage of those who gave a I don t know response ) Please indicate your agreement: we are able to find the software we need. My current systems technology requires significant upgrades Composite insurance Life insurance My current systems technology requires moderate upgrades Health insurance Non-Life insurance (excluding health insurance) My current systems technology do not require upgrades Reinsurer Strongly agree Somewhat agree Neutral Somewhat disagree 7

8 IFRS 17 Survey Results Key Takeaways Overall the top three expected benefits are: financial statements that better reflect business performance; easier access to capital markets; and improved information to support product design. 1 Just enough time to get ready 5 Actuarial, accounting and collaboration skills will be in high demand 2 Upgrading technology is necessary 6 Lower equality, less profit volatility and slower profit emergence 3 Significant implementation costs have been budgeted 7 Stakeholder awareness is growing quickly 4 Technology and acquisition of specialist talent underpin implementation budgets 8 Seeing more benefits v s costs 8

9 System Requirements of IFRS 17 Joanne Lonergan

10 IFRS 17 Challenges for models and systems Overview IFRS 17 Calculation Engine Granularity of Data Storage and Tracking of Data New Disclosures 10

11 Additional IFRS17 modelling and system challenges IFRS17 Calculation Engine Total IFRS 17 Insurance Liability Sources of Profit under IFRS 17 Profit CSM = Release of CSM Risk Adjustment Change in Risk Adj. ± ± Insurance Service Result Experience Variance Time Value of Money ± Investment Income ± Finance Result Future Cashflows Insurance Finance Income or Expenses 11

12 Additional IFRS17 modelling and system challenges Storage, tracking and granularity of data Why is data such a huge issue for IFRS 17? More reporting due to explicit building blocks Calculation and reporting of CSM Granularity of accounting disclosure and postings Need for historical data on transition 12

13 Additional IFRS17 modelling and system challenges New disclosures Ledgers Update to allow for RA & CSM on Balance sheet and amortization on P&L Group Systems Consolidation now needs to allow for CSM & RA Planning & Forecasting Needs to project the CSM & RA New KPIs Management Information New Reports/KPIs Allowance for CSM 13

14 IFRS 17 Challenges for models and systems What then? Can your system be easily adapted for these changes? What about the changes needed for IFRS18 and Solvency III? 14

15 Project Approach and Implementation Insights David Walsh

16 Vendor Selection Approach Here is a high level Vendor Selection Approach to assist you with selecting the most appropriate vendor for your IFRS 17 solution. Requirements Process Management Evaluation & Selection Refine Requirements Issue RFP Evaluate vendor responses Demonstrations Cost model Vendor assessment report Agree on functional and non-functional scope Establish evaluation criteria weighting Establish and agree evaluation criteria and scoring methodology Gather and prioritise requirements Finalise vendor short list Prepare request to vendor providers Issue request to vendor providers Prepare scenarios and functional area demo scripts Establish and agree demonstration scoring methodology Ingest effort and responses to date Facilitate requirements reprioritisation Read and evaluate vendor provider responses Facilitate functional and non-functional requirements scoring Capture and collate priority, vendor self assessment and scoring for consensus moderation Schedule and hold demonstrations Capture demonstration scores and comments Capture vendor license costs from RFP Refine licence metrics with vendors to improve accuracy Compare vendors costs Agree vendor scoring result consensus Validate results and recommend preferred vendor provider Prepare report with findings to the Steering Group 16

17 IFRS 17 Impacts & Program Structure Program Effort Low Medium High Results from our IFRS 17 impact assessments have identified the following impacted areas and it is recommended that your program structure reflects same. Business Actuarial Finance Data and Technology Target Operating Model Clear business case and support Program sponsor to ensure budget and management buy-in Expert knowledge will be required to ensure that the system is capable of meeting the requirements Knowledge required to define logic, build models and reconcile Key customer due to implications on Financial Statement returns Help to ensure program budget is defined and adhered to Data sourcing and interface Data storage / foundation Knowledge of Actuarial Modelling software Integrated Finance, Actuarial, IT and Business delivery model Future of Work Integrated workflow management Governance PMO Leadership 17

18 Critical Success Factors The following critical success factors will ensure a successful IFRS17 project Critical Success Factors Realisation of CSFs Scope & Approach Early identification of high level requirements and data discovery Consistent tracking to high level requirements / traceability matrix Defined scope management process with robust governance Plan & Monitor Produce integrated plan (including RAID) Ensure process-drive workstreams Deliver transparent status reporting OUTCOMES On time delivery Assign Appropriate Resources and Skills Early identification and securement of key project resources Adopt program structure not BAU Proactive engagement and planning with external delivery partners Business acceptance Design, Build, Test and Change Management Early set up of enabling infrastructure (i.e. data, governance, COE) Prioritise upfront design and data discovery Follow robust sign-off and change process Sustainable solution Deliver as an Integrated Program Operate with an end-to-end program discipline Set up integrated process tracks Follow agile, scalable approach The High Level Roadmap is designed to deliver an integrated IFRS17 solution while minimising implementation risk and cost of ownership 18

19 IFRS 17 What are your peers doing? Global Deloitte IFRS 17 Insurance Survey 2018 Below are some key findings from the 2018 insurance survey, specifically calling out system / technology aspects. 19

20 Closing Comments Daniel Gaffney

21 Thank You Any Questions?

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