Helping insurers figure out IFRS 17 and LDTI

Martin Sarjeant, head of insurance risk solutions management and strategy at FIS, explains how the financial software solutions provider is helping insurers prepare for the IFRS 17 accounting standard as well as long-duration targeted improvements (LDTI) to the calculation of U.S. GAAP financials.

What does FIS think about the one-year delay to IFRS 17?

Martin Sarjeant: The consensus from the industry is that insurers did need more time, and the International Accounting Standards Board (IASB) recognised that when it voted for the delay.

The one-year delay is not universally accepted as being long enough, but in my view, it is.

Since the IASB announced the delay in November, we have seen a lot of insurers use the extra time wisely. Some firms have accelerated their IFRS 17 plans – simply because there's now a definite date to work towards.

The Middle East region has only just started to carry out its gap analysis, and some parts of Sub-Saharan Africa are embarking on their IFRS 17 journey. So, clearly insurers in those regions need more time.

How is FIS helping insurers prepare to implement IFRS 17?

We've been working on supporting IFRS 17 calculations since the exposure draft of the standard was published in 2013.

During 2018, we enhanced our data and automation solutions to help insurers improve governance and control over their IFRS 17 processes.

In terms of the core calculations for IFRS 17, we made enhancements to some of the more complex areas such as measurement of reinsurance and its presentation in the results.

One of the major improvements we have made to our data solution is helping insurers translate the actuarial data into meaningful data for the finance teams.

We have also extended our IFRS 17 solution to provide a dedicated sub-ledger for IFRS 17, using FIS' Enterprise Accounting System (EAS), and enabling insurers to post the results of actuarial calculations directly to the general ledger.

This can help insurers with IFRS 17, as well as bring actuarial functions and accounting together.

How is FIS helping insurers with the LDTI to US life insurer accounting?

Over the last 18 months, we have been building on our IFRS 17 platform to develop a solution for LDTI and adapting our library to meet the LDTI's calculation needs.

Our solution allows for easy forecasting of LDTI financial statements and we believe we are one of the only vendors in the market to offer a complete end-to-end solution, which includes automation and data management.

Are there any particular trends driving actuarial modelling?

The biggest trend we see is cloud technology. More and more insurers are moving to a hosted cloud service, whereas previously insurers would have to deploy more internal resources to manage peaks in workload.

As a result, cloud technology is really freeing up insurers and reducing their costs. It is also transforming what can be done and how quickly actuaries can perform investigations and period-end runs.

It is very clear, from an actuarial modelling perspective, that the cloud can be used for developing models, pricing and small-scale runs.

Cloud technology is enabling end-users to take advantage of the latest hardware and software as well. It is the future of actuarial modelling.

The need for speed is another trend driving actuarial modelling and cloud technology can help in that respect, too.

There are also some new technologies – such as distributed databases, big data and advanced vector extensions – which can help speed things up.

What have been FIS's key achievements over the past year?

We have made great progress on several of our major product lines, such as our policy administration system, Compass, in addition to extending the EAS general ledger and sub-ledger solution, and our Prophet suite.

Our biggest collective achievement is the suite of products we have developed for IFRS 17, which continues to drive significant growth.

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