The new financial reporting standard IFRS 17 represents the most significant change to insurance accounting requirements in over 20 years. IFRS 17 is scheduled to be applied for reporting periods on or after January 1, 2021. Its dynamics will not only have implications on the financial disclosures of insurers but will also have profound operational impacts on all aspects of these organizations.
IFRS 17 requirements for insurers include:
A snapshot of the impact of IFRS 17 across process, policy, people, systems, and data for the insurance industry:
How can insurers manage all these requirements and changes? Let’s look at a case study of one large insurer that successfully managed the transition.
A large pan-African financial services group provides a broad spectrum of financial solutions to retail and corporate customers across key markets, including life and savings, banking and lending, asset management, property and casualty solutions. The insurer is one of the oldest, having a strong presence and a long history in Africa. Yet, along with that history came a patchwork of disparate legacy systems.
The insurer was running an aging on-premises ERP solution that presented real challenges in process standardization, making it difficult to adapt and innovate. Moreover, they were facing the new IFRS17 reporting and regulatory requirements that are impacting insurers across the globe.
The insurer’s commitment to financial transparency was its catalyst for transformation. It needed to modernize its on-premises financial accounting and reporting platform to support a smoother transition to IFRS 17 reporting. While looking to meet the requirements of a new accounting standard, the insurer also wanted to define a new finance operating model to improve efficiency and compliance—a model in which the insurer adopts the latest cloud innovations every quarter. Ultimately, these changes would transform the customer and employee experience.
To drive transformation, the insurer launched an ERP modernization project, a multi-year program that is helping it to achieve its new finance operating model with unprecedented agility. The initiative spans the core umbrella brand as well as its subsidiary brands.
This insurer took a proactive approach, modernizing their existing on-premises ERP solution with Oracle Cloud ERP. The cloud transformation focused on building a new finance platform along with process standardization across procurement and supply chain. The insurer is already a strong user of Oracle solutions, and wanted a platform that would scale across its business operations and integrate with its existing systems. The insurer embraced an out-of-the-box strategy with limited customizations or extensions applied to the core platform.
IFRS 17 ignited the insurer’s move to Oracle Cloud ERP, but the improvements go beyond compliance— improving efficiency, decision velocity, and quality across finance functions. Oracle Cloud ERP has fundamentally changed the operating model, covering processes, policy, people, systems, and data requirements:
This transformational project has helped the insurer to improve the close process, and reduce costs for accounting, reporting, accounts payable, audits, off-contract spending, and project overrun costs. Below is a summary of the key highlights of the Oracle Cloud ERP solution coverage:
This finance transformation project helped the insurer to disrupt the African insurance landscape by digitizing, simplifying, and automating finance end-to-end. It also helped reduce the overall cost to the insurer. The next step includes implementing Oracle Cloud Enterprise Performance Management (EPM) to improve financial planning, budgeting and forecasting. Also, the insurer is planning to expand the geographical coverage by rolling out to other operating countries.