• Insurance

Making complex issues manageable

The insurance industry faces a multitude of challenges including increased regulation, rapid technological innovation, a hyper-competitive landscape, and widespread consolidation. Staying ahead of the competition means finding new ways to manage margins and preserve capital which can include any or all of: investment strategies, diversification, reinsurance, technological innovation, increased cybersecurity vigilance, mergers, acquisitions, and joint ventures. At BDO, we're dedicated to understanding the complexities our clients face each day, and our insurance group puts their extensive industry knowledge to work by offering proactive solutions.

Regulatory compliance: Insurers are under more pressure than ever to address regulatory and compliance requirements in critical areas such as financial reporting, disclosure, privacy, and security. We offer pragmatic solutions to help our clients address the complexities of regulation - including GDPR, ORSA, IFRS 9, and IFRS 17 - by applying our thorough understanding of risk, regulatory, accounting, data, and technology requirements.

Evolving accounting, tax, and auditing standards: Insurance companies are required to adopt complex standards that impact financial statements such as IFRS 9, 15, 16, and 17. These standards can affect financial presentation, communications to investors and the investor community, and active management of capital ratios and minimum capital testing process. Our specialized accounting, assurance, and tax professionals are committed to ensuring that our clients are aware of emerging standards and can prepare to respond.

Digital transformation: Consumer digital needs are changing, data volumes are accelerating, innovation is everywhere, and IT agility is essential. These factors are the new norm for gaining and sustaining competitive advantage. Our team of professionals helps our clients accelerate their growth by fully capitalizing on their digital investments.

Enterprise risk management and cybersecurity: Insurance companies are increasingly threatened by cyberattacks, have highly complex IT environments, and face significant regulations within their markets. We focus on solutions that enable our clients to be agile in order to respond to regulation changes in the cyber landscape.

Financial advisory: The Insurance market is extremely active with broker amalgamations and insurer mergers and acquisitions. Our strong team of professionals assist our clients in the strategic, evaluation, transactional, and operational stages of the integration journey.

Forensic support: The insurance industry faces increased complexity in managing the risks associated with loss events. We offer a full range of forensic support for insurance loss services including accidents benefits, financial dependency, tort claims, and commercial losses.

BDO assists our insurance clients in understanding and complying with evolving accounting and regulatory reporting requirements as well as innovating with technology by offering an approach tailored to specific business needs. This is how we contribute to helping you gain a competitive edge in a challenging marketplace.

The IFRS 17 journey

For insurers, IFRS 17 represents a significant change to their business. With the current timeline driving towards a comparative reporting period on Jan 1st 2021 (or YE 2020) and full implementation by December 2022, the key stages and activities that will be part of any insurers own journey towards IFRS 17 compliance are clear.

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Key stages and activities that will be part of any insurers own journey towards IFRS 17 compliance

Considering the broad impact of this change, insurers need to establish a plan and start their journey immediately. Whether your objective is to modestly achieve compliance, leverage the opportunity to optimize processes, or completely transform your business, BDO's team of insurance industry professionals can help you navigate the complexities of IFRS 17. Utilizing decades of experience in Canadian accounting and financial reporting practices combined with in-depth knowledge of business and technological considerations around IFRS 17, we offer a portfolio of services and resources to support IFRS compliance.

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IFRS 17 data and technology

Compliance with IFRS 17 requires that data and technology have specific capabilities. IT leaders need to assess the options and decide if new capabilities should be integrated into existing ones or if new technologies need to be implemented. IT systems that can support financial planning, reporting, and integration technologies must have the following capabilities:

  • Data collection and transformation: ingesting data from source systems and getting it to a usable state.
  • Data modelling: making changes to the data so as to comply with the selected IFRS 17 accounting policy.
  • Data presentation and reporting: preparing a full suite of financial statements including comparatives and disclosures as well as analysis on data models.

Factors to consider when deciding on the right choices for data and technology systems that can meet the unique requirements of different organizations include:

  • The number of source systems required to model the IFRS 17 adjustments including the general ledger, policy systems, and other existing corporate systems and data sources
  • The volume and level of granularity / grouping of data from these systems
  • The level of actuarial input and review to the models
  • The number of source or destination systems that need to be updated for financial and operational reporting

Whether organizations decide to invest in new or existing systems, data and technology considerations associated with IFRS 17 can be time consuming and complex. In addition, IT should begin the process early in order to determine and start to address the impact of IFRS 17 on their data and technology systems. Many insurers seek outside assistance to help accelerate the assessment process and compliment their internal subject matter expertise with industry best practices and experience in the field.

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For most insurers, meeting IFRS 17 regulatory compliance may require the modernization of finance, actuarial, data and technology systems, and other important business processes. BDO's Insurance Data Integration Hub (InsurHUB) can help.

As a market-ready solution, InsurHUB is a set of data management best practices that accelerates the IFRS 17 journey. Built exclusively on the Microsoft Azure platform, the tool is a cloud-based solution that allows insurers to leverage their existing finance, actuarial, policy, and other corporate systems to securely manage data, business rules, calculations, and processes required to meet IFRS 17 regulatory compliance.

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InsurHUB is a set of data management best practices that accelerates the IFRS 17 journey

InsurHUB features and capabilities:

  • Flexible integration with a wide range of corporate and insurance system; finance, actuarial, policy management and others.
  • Data ingestion, transformation, and transport from corporate systems to the InsurHUB engine
  • Security, audit-trail, and versioning.
  • InsurHUB core engine capabilities tuned for IFRS 17:
    • Data warehouse and data management
    • Insurance/ IFRS 17 business rules
    • Calculations engine
    • Process manager
  • Insurance/ IFRS 17 data domains:
    • Claims
    • Premiums
    • Finance
    • Risk
    • Investment/ reinsurance
  • Templates for recording impact of actuarial adjustments on trial balance.
  • Visibility to changes between standards (IFRS 4 vs 17) and drill-back to financial level details.
  • Financial modeling, reporting, and corporate performance management (CPM).
  • Operational reporting and analytics (claims, premiums).
  • Advanced analytics (sales, customer lifetime value, claims/ loss).

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Domains of expertise

Though IFRS 17 will result in a complete overhaul of financial statements for insurers, the impact reaches the entire organization including risk, actuarial, and IT. IFRS 17 will require the transformation of data, organizational roles, technology, and business processes.

Because of the inherent complexities required to deliver such a large and complex program successfully, three domains of expertise must be engaged: IFRS 17 subject matter expertise, program management, and data and technology.

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