What is IFRS 17?
After nearly 20 years in development, IFRS 17 is due to go live on January 1, 2023.
This new standard aims to harmonise financial statements across the insurance industry, making it easier to compare between firms and across other industries. It states which contract items should be included on the balance, profit and loss statements of an insurance company, as well as guidelines for how to measure and disclose items.
The new standard represents the most significant change in insurance accounting in over a decade, and firms are at varying stages in their preparation.
The challenges of IFRS 17 cash flow matching
The biggest challenge with IFRS 17 is cash flow matching: the process of comparing expected cash flows from actuarial models, accounting actuals from the general ledger and policy admin systems.
Meeting new standards for IFRS 17 cash flow matching will be incredibly challenging for insurers because:
- Many have traditionally performed cash flow matching at the product level, which will fall well short looking ahead as IFRS 17 requires comparisons at a more granular level
- There is no universal approach for all firms – each insurer has different products, system landscapes and datasets
- Insurers will need to perform reconciliations between actuarial and accounting datasets. Doing this on time will be problematic considering these datasets can reach into the hundreds of millions
- Meeting the criteria for IFRS 17 and managing such large volumes of data will be close to impossible for insurance firms still reliant on manual processing
To overcome these challenges, insurers are pushing for higher levels of automation in the allocation, mapping and reconciliation of different data sets to increase controls and lower operational risk before IFRS 17 goes live next year.
Download the full paper to learn:
- What steps insurers have taken so far to prepare for IFRS 17
- The specific allocation, mapping and reconciliation requirements of IFRS 17
- Why firms without a dedicated solution will struggle for data accuracy and timeliness
- The consequences of relying on manual processing after the IFRS 17 go-live date
- Why firms will need a tailored automated solution
- How the AutoRek IFRS 17 cash flow matching solution works
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