IFRS17 SERVICE BUREAU
Introducing the Actuarial Partners Consulting IFRS17 Service Bureau.
IFRS17 will be a reality for life as well as general (non-life) insurers, Takaful, reinsurers alike. This is expected to place huge strains on actuarial and finance resources as well as extensive changes to back end IT and accounting systems. Multinational insurance companies will be able to rely on support from regional office teams for implementation and calculations but local and especially smaller insurers will be at an acute disadvantage. It is for this reason Actuarial Partners with the support of Moody’s Analytics has put together our IFRS17 Service Bureau.
What is an IFRS17 Service Bureau?
You will provide us with your policy data (on a monthly, quarterly or yearly basis, it’s up to you), which we will feed into our actuarial software to calculate the fulfilment cash flows on a cohort level as required by IFRS17. We will then feed these cash flows as well as accounting data from your accounting system into Moody’s Analytics RiskIntegrity™ IFRS17 solution. The Solution in turn will generate the sub-ledger of accounts which you will need for your financial statements. We will produce the fulfilment cash flows on all the different runs necessary to produce the extensive reporting disclosures.
What can the Actuarial Partners IFRS17 Service Bureau do?
In short we will take this acute disadvantage and turn it into an advantage, allowing you to focus on your core business activities and feeding you with business intelligence to quickly adjust your business as required in this new world of IFRS17.
Why choose an IFRS17 Service Bureau?
Using a service bureau also allows you to build up your actuarial and systems resources over time should you want to handle IFRS17 internally. Traditionally accounting standards were very much prescriptive, meaning very little was left open for interpretation. IFRS17 standards however are principles based. It will likely be quite some time until IFRS17 becomes standardized, so it is expected that the methodology used in IFRS17 will change significantly over the next several years. Thus companies investing in an in-house system now will likely to require costly revamps (variation order) until the dust settles. A service bureau avoids this need as the software provider will be responsible for any changes in the system resulting from changes in methodology. Over time you can build your own system at your own pace yourself in-house or by purchasing your own license from Moody's Analytics or you can continue to use the service bureau.
Why choose Moody’s Analytics RiskIntegrity™ IFRS17?
Moody’s Analytics has been developing regulatory compliance and accounting solutions for many years, and is a well-known and established name globally. This provides an assurance of their commitment for the long term. The IFRS17 product design has been strongly influenced by previous products, implementation and research and their solution has been awarded the Chartis Risktech Quadrant
Category Leader: IFRS17 Technology Solutions 2019.
Why choose Actuarial Partners?
Actuarial Partners Consulting, formerly a part of the Mercer, Marsh McLennan group, before a management buy out in 2010, has been active in insurance consulting since 1977. We are one of the largest actuarial consulting firms in South East Asia (SEA). We are active throughout the developing world and thus understand the special considerations of these markets. We are a thought leader in Takaful consulting. In 2016, Actuarial Partners Consulting was awarded Best International Advisory Firm at the International Takaful Awards in London. In 2017, our senior partner, Zainal Kassim was further recognised with a Lifetime Achievement Award. We are a founding member of APACS, the Asia Pacific arm of a global network of independent actuarial consulting firms (GLOBACS). Actuarial Partners Consulting was also the first non MNC firm of actuaries outside of the UK to receive accreditation under the prestigious Quality Assurance Scheme (QAS) from the Institute and Faculty of Actuaries (IFoA) UK. The award was presented to Actuarial Partners on the 11th of May during the IFoA Asia Conference 2018 held in Bangkok.
Some of the countries Actuarial Partners have been active in.
I’m interested. What are the next steps?
Some decisions will need to be made before participating our service bureau. Working with your IFRS17 advisor, a technical accounting paper ('Position Paper') will need to be put together. The purpose of this is to highlight the various decisions which must be made in relation to IFRS17 such as calculation methodology, definition of cohorts, and contract boundary by product as well as coverage units. This paper will be used by us to ensure the Moody’s Analytics RiskIntegrity™ IFRS17 solution is calibrated exactly to your needs. Subsequently or in parallel, a gap analysis should be performed to review the quality of the data and enhancements required to maximize the value of the output from the service bureau. Normally a financial impact analysis will also be performed at this stage to test the effects of various decisions arising from the Position Paper. Once these various decisions are made we will perform the coding of the actuarial valuation software, working with you to ensure the calculations are correct and implementing the various decisions on assumptions and scenarios into Moody’s Analytics RiskIntegrity™ IFRS17. Finally we will perform testing and parallel runs to ensure no surprises during the actual switch over to IFRS17.
Frequently asked questions:
If I build up my internal resources and eventually want more control can I take over full control of Moody’s Analytics RiskIntegrity™ IFRS17?
Yes, you can opt in future to purchase your own direct license of the RiskIntegrity™ IFRS17 Solution from Moody's Analytics. Note this would be subjected to the geographical areas Moody's Analytics provide support. We would be happy to assist in the implementation of the solution in your company.
Definitely, with this approach we are not forcing you to purchase any additional hardware or otherwise connect to your existing infrastructure. If you would like to move to another solution such as building your own internal solution this is fine and in fact is a huge advantage to this approach.
Definitely, we have worked with Takaful models from around the world and are able to cater for the nuances of each.
Who is responsible for signing off on the surplus distribution to shareholders as the accounts are now on an IFRS17 basis with calculations from the service bureau?
The service bureau performs the calculations, whereas the various assumptions used are from the insurer, most likely your appointed actuary. Thus signing off on surplus distribution remains with your appointed actuary or other responsible person of the insurer.
Of course, you will simply provide us with the cash flows and then we will do the rest.
Yes, however this would be subjected to the size of the company. For larger companies with sufficient resources, they are expected to purchase the software as a service directly from Moody's Analytics, rather than via our service bureau.
If I have my own actuarial resource, for example, in-house or if I have my existing actuarial consultant I am comfortable with, can I continue to use them?
Definitely, your existing consultant can collect your data, develop assumptions and perform the actuarial calculations and then provide them to us for us to put together the IFRS17 entries to the accounts. We can then provide the necessary info back for you to use accordingly. We can be involved as little as this, or as much as you need us to be, including being your appointed actuary.
I understand Moody’s Analytics RiskIntegrity™ IFRS17 uses the cloud. Will my regulator accept a cloud based solution?
Individual data such as policyholders name, identification number, and other personal details will never be stored on the cloud. Thus there should be no problems with data protection and confidentiality. This is however something which can be discussed with your regulator.