(Image source: Free-Photos/Pixabay.)
EY (London) and SAP (Walldorf, Germany) have collaborated on a solution to help insurance organizations transform their financial reporting data, systems and processes required to comply with the industry’s new international and U.S. reporting standards.
The new standards are the International Accounting Standard Board’s (IASB) IFRS 17 and US GAAP Long Duration Targeted Improvements (LDTI). Effective Jan. 1, 2022 for large public organizations, these standards will fundamentally change how insurance companies recognize, measure, present and disclose insurance assets and liabilities, which may impact all aspects of businesses’ reporting processes, according to a joint statement issued by an EY affiliate.
EY and SAP report that they have combined insurance accounting policy and data analytics experience with SAP S/4HANA solutions for finance, accounting, and regulatory compliance, bringing to market an approach to help insurers meet these new accounting reporting standards and better analyze their financial performance.
Real-Time Dashboards of Key Financial Performance Drivers
The firms describe the core of their approach as delivering standardized IFRS 17/LDTI financial analytics content (the EY IFRS 17/LDTI Intelligent Metrics Navigator) developed in the SAP Analytics Cloud solution, which they say provides real-time dashboards of key financial performance drivers under IFRS 17/LDTI and can be offered standalone or combined with certain related SAP products and the EY insurance industry suite for SAP, designed to enable seamless operational efficiency and excellence in insurance processes.
“The full power of the analytics solution can be achieved when combined with the SAP financial products subledger (FPSL) and general ledger, incorporating configuration templates, accounting policy interpretations and chart of accounts—a framework of accounting entries—from EY,” the statement says. :Combining these solutions and approaches from EY and SAP provides capabilities to help insurance companies accelerate implementation of a compliant finance technology landscape and ultimately access granular financial steering data in real time.”
For clients seeking an end-to-end software as a service (SaaS) solution for IFRS 17/LDTI, the integrated suite of tools can also be combined with the EY Digital Enablement Platform, which enables insurance companies to connect SAP systems with other systems and provides seamless connections to in-house technology platforms.
According to EY, more than an accounting change, IFRS 17 and LDTI will force insurers to make changes across departments such as actuarial, finance, data, IT and other processes.
“These new standards are about more than compliance,” comments Isabelle Santenac, Global Insurance Leader, EY. “They will require organizations to modernize—not ‘just’ modify—their existing systems. The challenge is to integrate those finance, risk and actuarial functions throughout an organization. The collaborative effort between EY and SAP helps the insurers to better project their performance in the new IFRS 17/LDTI world.”
The firms note that the EY and SAP approach is one of the offerings developed through their strategic alliance. “The combination of the EY industry business acumen and business transformation capabilities with SAP’s advanced technology solutions is helping organizations worldwide better address today’s competitive challenges,” the statement says.
One of the Most Disruptive Changes to the Insurance Industry
“IFRS 17 is likely to be one of the most disruptive changes to the insurance industry,” comments Toni Tomic, Global Head, Insurance Industry, SAP. “The EY and SAP approach will help insurance organizations better address the new standards as well as identify opportunities to transform their operating models, along with transforming their finance, risk and actuarial functions in their businesses.”