Enterprise Risk Management Technology Guide 2023

Aptitude Software: Technology to simplify IFRS 17 compliance

Brian Heale, senior insurance/IFRS 17 consultant at Aptitude Software, explains why the granularity of data required by the new accounting standard can be a problem area for insurers

How does IFRS 17 cause headaches for re/insurers?

Brian HealeWe now have approximately a dozen clients implementing IFRS 17 and working with these insurers to address IFRS 17 implications has unearthed a number of common themes.

One of the key issues is getting correct data at the right level of granularity. It still seems to be a major problem, even though a lot of work has been done to improve data quality, governance and access to data under Solvency II.

IFRS 17 requires new calculations as well as new, granular data sets and data groupings. This is particularly true for general insurers adopting the premium allocation approach (PAA), since under the current UPR approach modelling is undertaken at a highly aggregated level, for example, loss reserving and pricing. Sourcing the data and getting it allocated at the required level will be challenging, particularly in the actuarial area.

This impacts the collection of data from source systems and requires complex cost and insurance allocations.

Also, results data needs to be stored on a current and historic basis and managed effectively to be available for analysis, planning and forecasting. This is critical to produce disclosures, internal management objectives and external market reporting.

How can Aptitude Software help insurers implement IFRS 17?

We offer a fully functional solution, which is client configurable and includes a set of detailed accelerators. In all our years of addressing various regulatory requirements, we’ve found that having a flexible solution that can accommodate an organisation’s wide range of business requirements is important.

IFRS 17 requires potentially vast amounts of data, particularly in the form of cash flows. Aptitude’s solution can quickly and efficiently process full monthly cashflows in performant schedules - which can result in billions of rows of cash flows - or it can operate on a present-value basis. The latter approach can reduce the rows of actuarial data by a factor of twentyfold.

Solvency II required a considerable amount of change for insurers in terms of capital modelling, but I think IFRS 17 is perhaps more wide-ranging since it impacts profit emergence and revenue.

For example, we see many insurers looking at how they can improve their actuarial and finance processes and provide more granular information on key metrics.

An IP-rich solution like Aptitude’s can also help mitigate the scarcity of skilled resources and the need to report under multiple bases by automating IFRS 17 and other reporting processes.

What are the obstacles surrounding IFRS 17 projects?

One of the key risks for insurers is meeting the timeline associated with IFRS 17. It requires getting all the data, making a range of decisions including accounting choices, and configuring a solution.

As IFRS 17 is a large project, it’s critical not only to choose the right solution, but also to have professional project management.

Insurers also need to look at the scale of the changes required. Looking at this logically, it would be ideal to have a dedicated IFRS 17 target operating model. While we have seen some of the bigger insurers developing that approach, we have not seen it implemented by the mid-tier and smaller insurers.

For most of our clients, there is a requirement to reconcile, or at a minimum compare, IFRS 17 with Solvency II. This is primarily because profit (IFRS 17) and capital (Solvency II) are inter-related from a key performance indicator perspective.

It will take time and effort for Insurers to evaluate the synergies between their existing Solvency II systems and any new IFRS 17 solutions.

Another important point is that actuaries and accountants at insurers have, historically, not been particularly well integrated. The reality is now they will have to work more closely together as the actuarial numbers are now effectively driving organisations’ profits and revenues.

 

Amanda Steward

T: +44 (0)20 7496 8196

E: [email protected]

Guide entries by Aptitude Software

FactSet Data & Analytics Solutions

Touchstone

Pricing - Tyche Pricing System & Aon Pricing Platform

Reserving - Tyche Reserving System

Aptitude IFRS 17 Solution

Aquantec Ocean

Atidot AI & Analytics Platform - Atidot OPTIMAL

ANNalytica

BW KIDS 4 PRIIPS Tool

SIImplify

With Profits Payout Monitoring Dashboard

Demographic Experience Monitoring Tool

ATOME: Particles

ATOME: Matter

ADVISE® Enterprise Risk Modeler

Conning Allocation Optimizer™

Conning Climate Risk Analyzer™

FIRM® Portfolio Analyzer

GEMS® Economic Scenario Generator

XSG

Detech Optimizer

DEvent

Dynamo Analytics - Psicle

Incisive Essentials - Xcellerator

Integrate

Milliman Mind

ModelSign

Solvency II Compliance Assessment Tool

STAR Solutions NAVI

STAR Solutions VEGA

Milliman Mind–IFRS 17

Arius

Datalytics-Defense

Nodal Claims Triage

Milliman Economic Scenario Generator

Milliman AccuRate Fleet

Milliman Bungalow

Milliman PinPoint

Curv

Milliman Long–term care Advanced Risk Analytics™ (Milliman LARA™)

Milliman M-PIRe Valuation & Securitization Software

AXIS™ Actuarial System

Scenario Generation Solutions

Climate Pathways

RiskIntegrity™ Suite

Oasis Loss Modelling Framework

GLASS

Economic Scenario Generator

Phinsys Insurance Suite

CoMeta

ChemMeta

Matching Adjustment Analytics Tool

R³S Software Suite

Mo.net Model Development Studio

Mo.net Operational Modelling Centre

Mo.net Quotations Service

Mo.net Cloud Modelling Service

Mo.net Mobile Modeller

IFRS Assess Enterprise

SolvencyTool

SolveXia

Governance, Risk & Compliance System

DataValidator

ResQ Financial Reporter

Unify

Igloo

Radar

ResQ

zeb.control

evo-insight - New Actuarial Modelling and Analytical Platform from Zenith

Asseco IFRS 17 Engine

Actuo SII Engine

IFRS17 Solution

Reserving solution

Solvency II solution

Pricing solution

CLARA Casualty Claim Platform (CLARA Triage, CLARA Treatment, CLARA Litigation, CLARA MSP Compliance, CLARA Optics)

Portfolio Manager

JBA Flood Modelling Technology

IFRS Assess and Risk Analyser

Numerix Insurance Suite

PATOne EDM

Quantee Platform

On-Demand CAT Modelling Services on the Oasis Platform

Graci

Riskonnect

FE Solvency II

Grace Connect GRC Suite

Monitaur

DeepCyc

ForeCyc

Metryc

Escali Financials and Escali Supervision

CALFITEC

Quotech Underwriters Workbench

FIS Insurance Risk Suite (formerly known as Prophet)

LCP InsurSight

SS&C Algorithmics for Insurance

True North Data Platform

Balance Sheet Management (BSM)

Economic Scenario Generation (ESG)

MavenBlue Enterprise Pricing Management (EPM)

Optalitix Models and Optalitix Quote

Montoux Actuarial Automation Platform

Iris Actuarial Platform

CyberCube Analytics - Portfolio Manager

R³S Model Packages

R³S Modeler

R³S Process Manager

R³S Development Manager

Decision Focus

Fathom's Product Stack

Capital - Tyche Capital Model & ReMetrica

Incisive Essentials - Concourse

VIPR INTARGA

VIPR Insights - Data Analytics

Zupervise

Protecht ERM

Slope Software

Camms GRC Software

Quantee next-generation insurance pricing platform powered by AI

Oversight360, a Sicsic Solution

RISKflo

End User Computing (EUC) and Model Risk Management Software with Inventory, Discovery and Monitoring Modules

XLAudit Spreadsheet Error Analysis and Data Integrity Software

ClimateMAPS

Financial Results Analyzer

Risk Explorer™

RiskAgility FM IFRS 17 Calculation Engine

Predictable Dynamics

Res-Solver™

RiskAgility Financial Modeller