With the introduction of IFRS17, the core foundation of insurance companies changes to an economic accounting approach. Swiss Re have proposed that modeling every business activity with a consistent economic model be at the center of the organization in the publication ‘The Economics of Insurance at the beginning of the century.’
In the years following, mainly driven by the construction of internal models, more insurance companies started adopting the idea in their own environment. However, the outside perspective to investors and other external stakeholders remained a nominal accounting view. This led to discrepancies between the internally used economic model and the externally used nominal KPIs. Ultimately resulting in messages becoming blurred because certain business decisions made sense in an economic view, but not in a nominal view.
With the introduction of IFRS17/9, external reporting will be based on an economic accounting approach. This implies that the internal and external view of the business will be harmonized. Communication of the business plan and the performance metrics will incorporate the same model internally and externally.
Adapt the Existing Business Processes
The existing processes for business planning, performance measurement, liquidity planning, dividend planning, are based on IFRS4. All these business processes along with many others need to be changed and adapted to the new IFRS17 standard.
We provide you standardized models for all your business processes under IFRS 17/9 to get you started with planning and performance measurement after going live in Q1 2023.