Digital challenges arising from IFRS 17
Rob Konowalchuk of Avantage Reply discusses IFRS 17 and the digital challenges that will come from its implementation. He includes the need for a data governance work programme, a roadmap to get from compliance to strategic value and technological innovation to enable data governance.
Insurers are rapidly undergoing a digital revolution to meet customer demands and make business decisions. And the onset of IFRS 17 will prove to be a further digital challenge.
There will be new data requirements, new calculations, more granular data and more detailed disclosures, which present a data management problem across the entire data lifecycle – from source to target. The standard has been pushed back to 2022, which should allow for fuller examination and implementation of data governance to allow insurers to seize the opportunity that IFRS 17 presents.
Most insurers’ IFRS 17 implementation is already fully in flight and the accounting and reporting concepts are already well understood. However, there is more to do on how this data will be controlled and governed.
To design a strategy for data governance for IFRS 17, the impact on data acquisition, storage, analysis, analytics and reporting must be understood. Walking through a simplified end-to-end reporting cycle, some examples of these impacts are described below.
A data governance work programme for IFRS 17
Many insurers already have an enterprise-wide approach to data governance. However, a large number of those are in the process of rebooting and modernising this approach, employing new techniques and technologies. This is usually characterised by a bottom-up, more distributed approach and greater business engagement. In this case, IFRS 17 provides a good basis for deploying or expanding such an approach.
However, in some firms, formal data governance may be weak or virtually non-existent. In which case, IFRS 17 is exactly the catalyst needed to get board and executive level buy-in for securing budget and resource for an investment in data governance.
Whatever the situation, if IFRS 17 is a driver for enhanced data governance, then a clear, structured and disciplined work programme is needed to ensure success.
A roadmap to get from compliance to strategic value
With technical implementation for IFRS 17 already underway, it’s the perfect time to get the data governance stream up and running.
Once the programme is defined, a roadmap is key to ensuring that it moves beyond the attainment of compliance towards more strategic initiatives such as enhanced risk management, better informed underwriting and pricing, improved customer experience, stronger data security and innovative new product design.
There are many ways to measure the success of a data governance programme, but all must link to the goals set in the formative stages. Quantitative measures (eg, data quality scores) and qualitative measures (business engagement and process improvement) should be considered.
Technological innovation to enable data governance
A technology platform to enable data governance for IFRS 17 must be scalable and adaptable, business-centric and efficient.
Insurers of course already have data management tools and systems such as database platforms, extract, transform and load tools, data profiling and quality tools, and data governance artefacts such as business glossaries and data dictionaries. So, any new data governance platform must be interoperable with this existing estate and the insurer’s technology stack, including transactional and reference data systems.
Modern data governance approaches are all about collaboration between business users, the business and IT, and consumers and owners of data. Technological tools can facilitate this, but only with the right level of business adoption. This requires tooling with an engaging user interface including visualisation of concepts such as data lineage and the linkage between facets of data and metadata.
Cataloguing and describing business and technical metadata about the vast amount of data used to produce IFRS 17 reporting can be cumbersome and difficult to maintain. This therefore requires data cataloguing tools that can automatically (and intelligently) scan systems and databases to curate metadata and lineage for onward translation into business usage and analysis.
There is no one-size-fits-all approach to data governance for IFRS 17. Whether it is a catalyst for a new approach to data governance for the insurer, or fits into an existing enterprise-wide approach, a disciplined and tailored approach will ensure that data used for and produced by IFRS 17 is secure, relevant and of value to the business.
About the author
Rob Konowalchuk is a partner at Avantage Reply