We’re in the home stretch! Yet, with less than a year left until the implementation date, a significant proportion of our insurance industry in East Africa is yet to truly get stuck into their IFRS 17 projects.
IFRS 17 implementations are complex. Even for the simplest of insurance organisations, there is a lot to do. For instance, understanding the requirements, acquiring or developing an IFRS 17 engine, integrating that with the organisation’s system and developing a new chart of accounts that will be linked to a general ledger.
Additionally, the standards require insurance organisations to scrutinise their cash flow models, actuarial models, expense systems, financial planning and analysis processes, accounting rules, transition, controls and business analytics, among other areas.
The complexity of the standard itself is baffling decision-makers and making it hard for many to kick off their projects on the right footing.
Even if you haven’t yet started to prepare for IFRS 17, or you’re having doubts about whether your implementation programme will meet the deadline, there are still ways to get over the line in time and comply with confidence. Below are some of our thoughts based on the wealth of experience working with clients locally and from the learnings of the projects across PwC globally.
A good place to start would be identifying the right implementation partner — one that you trust and has the right expertise and capacity to dedicate to you.
There should be no compromise on meeting the IFRS 17 requirements, but together with an implementation partner, you want to take a pragmatic approach where possible. You should also be asking your potential implementation partner about what tools and accelerators they can deploy to fast-track your journey.
Trying to do it alone is not the best approach for our market. Can you develop your own tools and accelerators? Far from being the straightforward option, ‘do it yourself is likely to be the trickiest, riskiest and, in the long run, most costly option.
If opting for a vendor solution, it’s important to recognise that what’s right for other businesses might not be for yours. Also, when selecting a vendor ensure you critically access their understanding of our market, and your business and you have access to support over the long term.
One, you don’t want to end up with a solution that is not fit for your business, and two, you want to ensure that your tool provider is accessible!
While some elements of IFRS 17 are reasonably straightforward, others can be deceptively complicated. Our experience shows that this small proportion of complicated tasks can easily end up taking more than half the time; if you’re not well planned to deal with them it can significantly delay your project. Being guided on how to tackle these quickly and effectively is imperative so that you can keep moving on.
IFRS 17 changes the entire financial statements, not just one line item like IFRS 9 did. So, the faster you can start piloting the new financials the deeper your understanding of IFRS 17 will be.
This reinforces the need to work with an implementation partner that can deploy the right tools and accelerators.
Stakeholder management may sound cliché and as over-used, as those two words are, they are critical as part of IFRS 17 implementation. Effective stakeholder management will not only ensure that the project stays on track, but that it also adds value to the business.
Implementation of IFRS 17 will make you dig deep into your pockets, and so keeping shareholders, boards and auditors walking alongside you ensure you reap the benefits. It is vital to educate them as you educate your management on the journey.
Another important consideration is data. You are very likely to spend the highest proportion of time sorting out your data/systems (even after the implementation date) irrespective of whatever IFRS 17 engine you use.
Understanding the data requirements and potential systems implications early on is important. Additionally, being able to form a view on how that data will be gathered and what assumptions can sensibly be made in the meantime are equally vital.
Finally, you need the right mix of skills and capacity to deliver IFRS 17 efficiently and successfully. However, what is often forgotten is that we need to look after these people too.
IFRS 17 has already created a lot of movement in our markets and recruiting the right skills is only going to get increasingly harder. Losing a critical staff member will set your project months back. An effective change management plan should also be part of the people agenda within your organisation.
With IFRS 9 implementation across East Africa, we saw many banks sit on the fence until the deadline was looming. Some of these banks bought cheap, their implementation was half-baked and four years on they are still not happy with their models. They have spent money on patchwork updates or have simply thrown away their old system and started afresh.
We must learn from this — think very carefully about your IFRS 17 implementation approach and ensure that the various partners you work with (consultants, vendors, IT providers) are right for you and will not end up costing you more in the long run.