Over the past five years, as insurers have prepared for the International Financial Reporting Standard issued in May 2017 (IFRS 17), which will dramatically affect finance — including underwriting pricing, and sales and marketing — they’ve steadily adopted cloud technologies and ramped up their investment in data engineering capabilities. More recently, to further prepare themselves for the new regulations and to modernise, insurers have also begun changing how they deploy these data applications and solutions. Instead of maintaining the installment of solutions onsite, insurers are choosing to concentrate on their core business and are beginning to adopt infrastructure provided by cloud services and software as a service.
This strategic redesign is a major undertaking, but insurers are realising they need to accelerate their transition. Making these changes will bring down expenses in the long term, and improve flexibility and focus on value-generated activities. Installing modern analytics will also enable better decision making and help insurers differentiate themselves from competitors.
This is crucial not just for delivering on IFRS 17, but for dealing with business-critical scenarios such as COVID-19 and the demands of the future in general. All these efforts require having the right data management framework in place, so building this framework should be insurers’ top priority right now.
Data is one of an organisation’s most valuable assets. But the variety of technology platforms and applications that firms use to manage the data can make optimising it difficult. Disparate systems generate huge quantities of information, but in a siloed way that limits access. Because of these challenges, attempts to adopt cloud or multi-cloud strategies — such as moving all enterprise data into a cloud-hosted ‘data lake,’ or company-wide repository — are rarely successful.
To overcome these challenges, an organisation needs to build a data management framework that dictates enterprise-wide rules for how data is collected, stored, transformed, distributed and consumed. Consistency in how data is handled will help a company access it and use it to ensure regulatory compliance and develop business insights. A framework should include rules governing structured data formats, such as databases, and unstructured and semi-structured formats. A framework also should describe how data connects with business processes to yield actionable information.
IFRS 17 requirements and the general advantages of migrating enterprise data to the cloud have been well known for years. But the COVID-19 pandemic has shown that these capabilities are an even more urgent business imperative than they already were. With a proactive and holistic data management framework and cloud strategy in place, insurers can accomplish this transition with reasonable speed and minimum disruption to achieve significant business benefits.