Master data management and aggregation
This capability is necessary for data preparation, data validation, posting and reporting. Besides needing a predefined IFRS 17 data model and flexible approach to data storage, a vendor’s solution needs robust data feeds, a set of predefined rules to aggregate and post data/results, and the ability to both integrate with general ledgers and actuarial models to load and post data and to create an audit trail to track results.
This capability is critical for fulfilling all of the IFRS requirements outlined above. The vendor’s solution needs to orchestrate end-to-end workflows using clear reporting processes that can coordinate and assign tasks and resources. It needs to develop scripts to trigger execution of extract, transform and load (ETL), calculations, postings and other components; develop worksheets to perform adjustments; and be able to audit data inputs, outputs and any manual interventions. The vendor’s solution also needs the flexibility to adapt to specific users’ needs.
To comply with the standard, vendor solutions must provide a calculation engine capable of performing the required number of calculations. This means having technology powerful enough to process a significant volume of information, with the ability to trace and document calculation inputs and outputs in detail. In addition, a platform must offer a built-in data management and orchestration framework that allows users to oversee and configure data transformation and logic applied to input and output data, therefore providing data lineage, traceability and auditability.
Some of the calculations that a vendor solution will need to make include: separation of non-insurance components, (de)recognition of contracts, profitability testing, creation of unit of accounts, calculation of best estimate cash flows, discounting of cash flows, calculation of acquisition expenses and amortisation, calculation of the risk adjustment, and calculation of the contractual service margin (at inception and subsequent measurements). The engine must also create tables for final and intermediate results.
A vendor’s solution needs predefined rules that can integrate with data management to generate posting. The engine must be easy to deploy and able to accommodate your custom posting rules. It also needs an easy-to-use interface so finance people can configure it as needed.
Another critical capability is the ability to develop predefined and ad hoc reports leveraging in-memory storage for balance sheets, statements of comprehensive income, and disclosures. These predefined reports monitor the overall process status and analyse the postings generation. Ideally the vendor’s solution will present these reports in visually engaging and intuitive ways tailored to the insurer’s preferences.