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Coffee Chat Episode 3 - IFRS 17 Compliance... Why You Shouldn't Wait


Coffee break chat with Rohan Persaud and Maha Nataranjan from CCH Tagetik on why you shouldn't delay your IFRS 17 and how Insurance are handling remote implementation.

Transcript


Welcome everybody to Coffee Chat for Financial Professionals.

My name is Rohan Persaud and I'm the Country Manager for Tagetik here in Australia.

Grab a cup of coffee and join me as I talk to industry experts about their thoughts, opinions, ideas, experiences as they see in the market today With me is Mr.

Maha Nataranjan who is the Head of IFRS practice here at Tagetik across Asia-Pacific.

Now Maha, you and I worked together or either work against each other for a long time about 20 years ago you were at Hyperion and I was at Cognos.

We worked for a while, and you went to Oracle and I went with IBM.

We fought against each other for a while and then we ended up here at Tagetik which is a fantastic opportunity so I welcome you to the show.

I always value your thoughts.

Thank you very much, Rohan.

That is a nice introduction.

Yes we worked together and we were fighting against each other and now we're together.

It's like small world.

So Maha, first question.

We hear about IFRS 9, 15.

16.

17 for all of our viewers can you tell us what is IFRS 17 is all about? oh yeah IFRS 17 is the International Financial Reporting Standard and this is particularly relevant to the insurance company because it details the measurement model that insurance companies will have to follow the intent of the standard is to standardise the measurement models of the liabilities of the IFRS team so that you know you get a lot of transparency, visibility, compatibility against peers as well as across industries Okay, thank you for that but you know what we heard that the IASB just recently, I think it was in March that they decided that they're going to push off the IFRS 17 compliance to 2023.

What does it mean for insurers? The original date was in 2021 and it was postponed to to 1st January 2022 in the in the first time.

But in March 2020, looking at the complexity of the change and also looking at the feedback from all the stakeholders and also look in the state of the insurance / insurers in terms of their readiness, it was postponed to going to 1st January 2023.

This is an opportunity for the insurers to do it right because they just have the right time.

But you mentioned doing it right with covid-19 and working from home, and the lockdowns, etc, etc you and I also have talked about the fact that many insurance companies are not necessarily built for working at home so how to get this done? yeah, that's a good one.

And yes mostly Financial Services industry including Insurance are not very geared up for working from home because of security and that's how the fort was built.

So now they are finding it very difficult but they are slowly adapting and getting it fast.

In fact, we're doing an implementation in Malaysia in an Insurance company where we are doing the entire requirements study and design remotely so which means we have all the business partners, as well as the customers working remotely.

And they do understand that this COVID or remote working is gonna be there for some more time, right.

So they are all getting geared up for working remotely on this.

But can they afford to wait? That's a good one actually.

The postponement to 2023 has been given for a reason because it takes an average 18 to 24 months to deploy the change in the organization.

Actually there are multiple steps in this process number one is to make a technical position paper as to what evaluation method that are following and then selecting a vendor to walk them through into the solution and then implementing the solution and doing some parallel runs so that they have a case one of data for competitive so there are multiple steps involved in this.

So it takes 18-24 months based on our experience number one number 2 is if they can afford to wait, no.

Because when there is a big rush to comply to a last-minute you may not find the appropriate resources number 3 is BAU or business as usual work for the team.

When I say the team, the team for IFRS 17 should comprise of actuarial, finance, and accounting and it believe all of them are usually busy on the month-end closing, quarter closing and board reporting and a lot of other things like so can insurers can wait? Definitely, they have to take action at the present moment and only then they can comply on time.

You and I have done this for a long time and time moves very very quickly right just when people think they have an opportunity sit back they don't mind, and 2023 is around the corner.

Now, Maha, you've been working with multiple insurance companies, reinsurers every type of every size across the Asia-Pacific for a while now, what message would you like to leave our viewers okay actually this IFRS 17 is a very fundamental change for many insurers, especially the general insurers, they may find it a big change because they may not even have an in-house actuary team.

Some of them okay.

And the change involves a lot of systems process as well as technology, people kind of changes.

So acting immediately is one of the key messages I would want to leave, okay.

Number 2 is because because of this COVID-19 where everybody's supposed to work remotely and also the BAU work at the team, actuary, accounting and the IT there is definitely a lengthier time that is required to implement this.

And not only that when you do the requirements and implementations remotely there will be a slight reduction in the productivity so we may have to give some time as well, an extra time.

So net-net what is the required then.

Number one they should be looking for a solution that got prebuilt functionality okay so when I say prebuilt functionality, it shouldn't be a straitjacket but it should also have the flexibility to configure it according to their individual needs so that addresses the IFRS 17 out of the box right.

Second is a team which should be a combination of actuary plus accounting and IT, finance accounting.

Because we are talking about IFRS Financial Reporting Standard so it requires finance participation, actuary participation, and IT participation.

Also the implementation team should have delivered knowledge.

Who would have done multiple implementations before? and then selecting the right vendor who got the right experience in deploying regulatory solutions like this.

So selecting the right solution which has prebuilt functionality, the team who has got the experience of doing this, and then the vendor who has got prior experience deploying this kind of regulatory reporting solutions are the three things that should be be looking for.

And not to wait for one more year, they should be acting now.

great stuff.

Well thank you very much Mama for sharing your thoughts today really appreciate it thank you very much Rohan.

It was a pleasure talking to you again.

Thank you.

That's all the time we have for today, but thank you for joining this.

If you like to have more information, Maha's email address as well as mine should be on the screen for floating around somewhere.

If not, find us on LinkedIn.

and also I just like to point out that Maha has several blogs as well as archived web webinars and Web cast that he's done on this topic that are really much focused on the do's and don'ts of the IFRS 17.

Why you can't wait but what you need to do in order to get things set up so you'll please check them out.

so thank you Maha again and everybody please join me next week as I will talk to M r.

Daniel Bruce who's a partner here in Australia KPMG and he'll be he'll be talking about he's responsible for the finance strategy and performance portfolio and next week and talk to us about the future of finance.

Until then everybody, stay safe Thank you Rohan.

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