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Do you have an IFRS 17 Lifeboat on board?

Systemorph showcased the “IFRS 17 Lifeboat Approach” on the first DAV/DGVM e-Jahrestagung 2020 on actuview.

An IFRS 17 Lifeboat is a way of creating a small but fully functioning IFRS 17 reporting process that operates using real-world data and provides you with a hands-on reporting implementation.

In oceangoing vessels, a lifeboat is a small version of a ship that has the same capabilities as a ship but on a limited scale. Similarly in our industry, an IFRS 17 Lifeboat enables you to implement and operate your model against real data on a smaller scale, to validate your strategy and your IFRS 17 project plan 

The effective date for the IFRS 17 insurance contract reporting standard  has just been postponed to January 1, 2023, thus giving the insurance industry 12 more months to implement the IASB reporting requirements.

The IASB issued  the IFRS 17 reporting  standard in May 2017 with first amendments in 2019. Regarding the implementation of the standard there is not a clear picture of how most firms in the market will comply.

Some companies are close to parallel run, some others have just started, and others are still evaluating strategies for an IFRS 17 implementation  process within their organizations.

In this blog entry we want to share with you some of the most common challenges we hear and experience in the market, how you can mitigate them, and why it makes absolute sense for you to have a checkpoint on your ongoing project to validate your current approach.

With the “Lifeboat Approach,” our Four Week Proof of Concept , we can verify your implementation strategy and ensure a timely delivery of your IFRS 17 implementation project. Based on two successful implementations we have supported, we will explain some of the most common challenges – and how to master them – in order to make your IFRS 17 project successful.

The most common challenges in implementing IFRS 17 and how to mitigate them

Standard model does not fit reality

It all starts with the beginning. The IFRS 17 standard is a principle-based standard. This implies that a tool with a standard model would not fit your particular requirements. You must have a tool that allows you to customize models for what your business really needs to achieve additional value for your organization, instead of generating only additional costs. This may sound easier than it is, as there is only very limited IFRS 17 successful implementation experience in the market.

Business rules are more complex than expected

The two times postponed effective date signals some of the complexity of the IFRS 17 standards for implementation. IFRS 17 business rules are more complex than expected. This leads to very surprising results when you run your first models with real business data instead of test data in a sandbox environment. The only way to mitigate these risks is to build and iterate your business models frequently to better understand the effects on your Balance Sheet and P&L. This enables you to decide on the best fit for your specific business requirements.

Overwhelming number of challenges even if you have a calculation engine

In the beginning many customers believe that the IFRS 17 project is almost finished once they have a first version of the IFRS 17 Calculation Engine. It is only then when you realize that new problems pop up like mushrooms. To name just a few, they include: testing, determining adequate granularity, establishing an audit trail, and integration into the existing technology stack.

Some of the typical challenges are described in the picture below.  

To avoid running into these problems late in the project we advise you to test your models and parameters as soon as possible using a separate calculation engine to verify and finetune your approach. This will also leave you enough time to tackle problems not related to your IFRS 17 Calculation Engine.

IFRS 17 Lifeboat Approach

Systemorph can literally put a lifeboat on your IFRS17 implementation project through a Four Week POC with real business data from one of your critical business portfolios:

  • Test your methodology design decisions

  • Play with your parameters and assumptions (like interest curve) to assess the impact on BS and P&L

  • Verify your real implementation on an independent IFRS 17 Calculation Engine

  • Benefit from the experience of two successful IFRS 17 implementations

Leave sandbox

Customers are facing big challenges with IFRS 17 implementation when they leave the sandbox environment and start testing with real business data. If you have not tested your parameters and assumptions with real business data, you are operating in a black box. You can’t see in which direction you are heading or where you should go.

Our clear advice is to leave the sandbox environment as fast as possible and start testing with real business data.

Simulate different design decisions

To generate the most effective results for your business, you should simulate the expected outcomes using different design decisions with real data. Only through the exposure of your design decisions to the real business data can you assess the impact these decisions will have on your Balance Sheet and your P&L.

Benefit from successful IFRS 17 implementations

Systemorph has already implemented two successful IFRS 17 projects, among the earliest in the industry. The main targets in these projects were to achieve IFRS 17 compliance, simplify the operational models and rationalize the economic frameworks.

These projects have all started with a POC.

You may ask yourself, “How do they do it? What is different from other solution providers?”

We believe the difference lies in the following topics:

  • All our solutions are based on our cloud-based Systemorph Vertex platform, built for complex and intense calculations, challenging data integration and data transformation topics.
  • Our staff consists of a seasoned workforce holding advanced degrees in mathematics, physics and computer-science.
  • Our actuaries have extensive knowledge in enterprise systems, risk and capital management, modelling and information management.
  • Systemorph is exclusively focused on serving the insurance industry.


No matter how big your ship is, how many people are on board or how expensive it is, you always need to have a lifeboat.

If we apply this analogy to your IFRS 17 projects, it means that we can put your mind at ease with a Four Week POC with real business data, validating your implementation approach and chosen assumptions. We can offer this with a fixed price, enabling you have a workable simulation engine at the end of four weeks within your budget constraints.

Speedboat as a real option

If you come to the conclusion through this POC that you want to alter your course and change direction, we can turn that lifeboat into a speedboat that will ensure your timely implementation of your specific IFRS 17 project.

If you want to know how we can exactly help you with your implementation, please do not hesitate to contact us.

Martin Buess

Andreas Grigull