The deadline for IFRS 17 implementation in January 2021 will be here in a blink of an eye. And the implications for insurance organisations will be significant. But it will also create a valuable opportunity for insurers to start creating their workforce of the future. Is your organisation using IFRS 17 to transform their enterprise?
By now, most insurers should already be thinking very carefully about their IFRS 17 implementation strategy. It is, after all, the biggest change to insurance-related accounting standards in more than a decade.
In part, the change will be significant because IFRS 17 goes far beyond financial reporting to also encompass actuarial valuation, asset liability management and risk management. The impact and requirements of IFRS 17 will be felt across virtually every part of the insurance organisation.
It will also be a significant change for the workforce. Indeed, most insurers already recognise the massive workforce challenges that will arise during the 'transition years'. Parallel processes and reporting will need to be conducted and reconciled. Stakeholders will need to be informed and updated. New processes will need to be tested and tweaked. Compliance and audit procedures will need to be performed. And, all the while, business will need to go on as usual.
The pressure will only rise as insurers work through the implementation roadmap ahead of the 2021 deadline. History suggests that few organisations will keep to planned timelines. For employees, the pressure will become enormous as the implementation deadline looms.
Those looking further down the road will also recognise that IFRS 17 will require insurers to rapidly evolve their current skills and capabilities – both through the transition period and post-2021 – to properly manage the business under the new standard. In some cases, new competencies will be needed to speed up decision-making, particularly within middle management. Many may struggle to create the right mix of skills, capabilities, job roles, collaboration and operating models to also achieve a high level of business flexibility, responsiveness in decision-making and value.
KPMG member firms believe that insurers can view the shift to IFRS 17 in one of two ways: either as 'yet another disruption' that must be endured; or as an opportunity to accelerate their existing organisational transformation roadmap. Those conforming to the former view may capture some benefits as they implement IFRS 17, but they will also likely encounter significant operational challenges. Those that take the latter view should find themselves rejuvenated and fit for the future.
There are a number of ways that insurers could use the shift to IFRS 17 to catalyse their transformation efforts:
The bottom line is that IFRS 17 deadlines are coming. And that will mean massive changes for the traditional insurance workforce. Insurers can either try to get through with the minimum of disruption, or they can see IFRS 17 as an opportunity to catalyse real and sustainable transformation within their workforce and their wider organisation. We would strongly encourage the latter.