IFRS 17 – What You Need to Know

Another new, more robust IFRS standard for insurance contract accounting, the IFRS 17, is on the horizon. The need for this new standard emerged from the fact that the current IFRS 4 allows far too many accounting policies that limit comparability, even within the insurance industry. The interesting thing to note is that the standard has already been under development for a few years now, but is not likely to be in effect until 2020, or later. While that may seem like a long lead time, it is important for banking, financial services, and insurance companies to start preparing now to meet the challenges of the expected complex implementation process.

With the implementation of new standards of the IFRS 17, banking and financial management personnel will have to quickly consider the potential impact on their own organization. It may seem to be just an accounting or numbers issue, but the truth of the matter is that IFRS 17 will have implications for business processes, IT systems, management, and employee skill sets.

These changes can be challenging as they will alter the way a business is managed, measured, and reported.  However, there is a silver lining in that revising many of these processes can lead to refinement and optimization that will streamline processes that may otherwise have gone unchanged.

Banking and Big Data Management Requirements

With the new IFRS 17, it is expected that more data will be required and it will be necessary at a much more precise level. This will have a clear impact on many levels for financial institutions, and the change is expected to be significant in all realms of business. One of the ways this is seen is through the new requirements for collection and aggregation levels.

Collection & Level of Aggregation

The IFRS requires that organizations identity portfolios of insurance contracts into similar levels of risk management. This leads to a need to determine which contracts should be in the same portfolio, based on three guidelines related to when contracts should be divided:

• Groups of contracts that are oppressively burdensome at initial recognition
• Groups of contracts that have no major potential of becoming onerous subsequently
• Remaining contracts in a portfolio, if any exist

Also, no contracts issued more than a year apart may be in the same collection. There are also guidelines regarding more complicated portfolios and whether they can remain as is or must be divided. All in all, it’s a lot to sift through and think about, which is why many are looking for a new solution.

Command Over Banking Big Data

Using Cornerstone®, the industry-leading Data Lake Platform, Next Pathway can provide capabilities that help organizations meet compliance requirements quickly and efficiently. Cornerstone automatically captures data lineage, provides metadata management, offers self-service data ingestion, and standardized data to prove the origin and path of data, all the way from the source system to the final report.

If your organization is concerned about the new IFRS 17 regulations, and you are searching for solutions to ensure compliance and seamless implementation, we can help. Please contact us to learn more about your options.