Most insurers have now started, or are about to start, a post-implementation finance transformation and modernisation program, with some significant investments being made in technology, process and data.
Successes
One of the top benefits observed post implementation of IFRS17, with 80% of survey respondents in agreement, is an improved interaction between organisations’ finance and actuarial departments. In addition, as a result of the implementation process, over two-thirds of survey respondents have seen major improvements in the creation of complex models, the integration of IT systems and the management of large scale transition projects.
Challenges
While substantial benefits have emerged from the IFRS17 implementation process, there have also been issues. The top three challenges identified by survey respondents are:
• Resource constraints - 75% say the greatest key person dependency risk (where an organisation relies too heavily on the skills of one person) relates to actuarial expertise and 69% say for those with a technical understanding of the Standard.
• Having to introduce additional manual workarounds to meet implementation timelines.
• Manual processes and a lack of automation.
Respondents admit that in-depth knowledge of the Standard is not yet widespread within finance and actuarial departments and 38% say a handover from implementation project teams to ‘business as usual’ staff has not yet taken place.
Some insurers are also struggling with the complexity of preparing information that complies with the Standard. Time constraints, related to the calculation and reporting of results, is proving to be another stumbling block for half of those surveyed.
Alex Bertolotti, Insurance leader, PwC UK, comments: “While IFRS17 has been a long time coming for many, some healthy lessons have been learnt along the way. Finance and actuarial teams work closely together on many overlapping activities, so insurance firms will welcome the improved collaboration brought through the IFRS17 implementation process. This new way of working will be helpful as companies take a breath and consider what business as usual now looks like and press ahead with modernisation and efficiency programmes.”
The journey is far from over
With IFRS17 now largely implemented, most insurers are commencing with finance transformation programs or modernisation initiatives. Significant investments are being made in process, technology and data - 65% of survey respondents are planning a change in their finance or actuarial technology over the next five years, with 53% having already commenced their post-implementation finance modernisation roadmap.
15 respondents to PwC’s survey expect to collectively invest over €1 billion in finance modernisation initiatives over the next five years. The top three considerations driving this investment are efficiency of processes (including cost), improvement of management capability and insight generation, and improving the effectiveness of the operating model.
Investments are being made in Cloud storage and data lake technologies, as well as complementary data management practices, reporting and analytics tools. This reflects the increased complexity of reporting and the desire to add more value to the business.
Finally, the vast majority of insurers (94%) say they intend to deploy some form of AI in the future, with 82% of them already running ‘proof of concept’ programs over using AI for some specific use cases.
Alex Bertolotti, Insurance leader, PwC UK, concludes: “Timely access to good quality data for operational and strategic decision making has always been the lifeblood of the insurance sector so it is no surprise to see significant investment planned in this area - the finance function of the future is data-driven and technology-enabled.
“In recent years, and especially post IFRS17, there has been an explosion in the amount of data that needs to be managed and far too much time is still spent gathering and preparing data from disparate systems. By embracing modern technology insurers can become more efficient and effective, ultimately adding more value to the business. There is a real opportunity ahead to provide more information and insight, in less time and with substantially less cost.”
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