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Aon launches new IFRS 17 solution to bridge the gap between risk and finance
Jul 8, 2019 | Posted by Insurance-Canada.ca
Chicago, IL (July 8, 2019) – Aon plc, a leading global professional services firm providing a broad range of risk, retirement and health solutions, has launched an IFRS 17 solution on its ReMetrica capital modelling platform to help insurers to fulfill their reporting obligations.
According to Aon's analysis, over 1000 re/insurers worldwide are implementing IFRS 17 (International Financial Reporting Standard, issued by the International Accounting Standards Board in May 2017), to bring a more unified way of sharing financial results. This process is often led by a re/insurer's finance department but actuaries in risk departments play a critical role in calculating and reporting insurance reserves, reinsurance recoverables and forward-looking profitability.
The increased volume of data and complexity of calculation required for IFRS 17 mean that actuaries can no longer rely on manual processes and spreadsheets as they feed business-critical inputs into accounting systems. As a result, insurers need to invest in new technology to bridge the gap between risk and finance.
ReMetrica's new IFRS 17 components can support actuaries by automating calculations and cash flow projections with flexibility and a transparent audit trail. They can also help carry out an eligibility test for the simplified model and identify if a contract is onerous and track its account balance over time.
"The new solution helps to bring finance and risk departments closer together to deliver more accurate reporting under IFRS 17," said Milena Lacheta, IFRS 17 lead at Aon's Reinsurance Solutions business. "These outcomes go beyond a regulatory checklist to help strengthen insurers' capital, reinsurance programs and ratings that will ultimately optimize the new balance sheet and profit & loss."
"Aon's ReMetrica technology can be leveraged in new ways to address the requirements of IFRS 17 implementation," said Paul Maitland, Head of Aon's ReMetrica team. "As part of Data & Analytic Services, the ReMetrica team was able to invest in developing the new IFRS 17 components which can now be scaled and used with insurance companies all over the world."
ReMetrica is developed in the Aon Centre for Innovation & Analytics in Singapore which delivers leading solutions by leveraging unmatched data and analytics capabilities across both risk and people solutions.
ReMetrica: Empowered for IFRS 17
The International Financial Reporting Standard (IFRS 17) will become effective from 1 January 2022 and will transform financial reporting for insurers, while requiring sweeping changes in existing systems and processes. Technology will play a key role in both meeting the challenges posed by these changes and embracing the opportunities for enhanced reporting. This is where ReMetrica – Aon's risk and capital modelling platform – is able to help you achieve the full value of IFRS 17 implementation.
Proven Software Solution for Insurance Modelling
IFRS 17 requires a modelling platform that is easy to use and has powerful customizability. ReMetrica will support the transition to IFRS 17 by allowing its users to design sophisticated models using its intuitive drag-and-drop functionality without the difficulties and risks of programming and maintaining a modelling code base.
In addition, ReMetrica continues to provide the same modular business logic and user-friendly interface that have proven to be a durable and reliable solution for the insurance industry.
IFRS 17 Reporting Components
ReMetrica contains IFRS 17 reporting components for both the General Model and the Premium Allocation Approach.
These components have the same self-contained standardised business logic and flexible customisation that ReMetrica users have come to expect. IFRS 17 components will track all calculated building blocks of the model over the number of years projected.
Enhanced Audit Capability
IFRS 17 places capital modelling at the core of financial reporting, placing a renewed focus on rigorous governance and control mechanisms towards models and assumptions.
Auditability of models, assumptions and results will be a keystone around which IFRS 17 reporting will revolve.
Workflows in ReMetrica provide full audit trails, allowing users to trace exactly which assumptions and data were behind each set of generated results, giving assurance that model inputs are verifiably correct and that the outputs being generated and used are derived from the correct model and assumptions.
To gain greater insight into the business, companies may wish to project their IFRS 17 income statements and balance sheets under various scenarios and bases. ReMetrica provides native model comparison functionality that allows users to easily discern changes made between different iterations of model builds.
Data Handling and Management
IFRS 17 requires significant attention towards data handling and management, and in particular on the volume and level of granularity of data required.
Workflows in ReMetrica permit the embedding of data manipulation procedures directly into modelling processes in a way that is flexible, transparent and reproducible.
Because IFRS 17 requires significantly greater coordination between stakeholder functions such as actuarial, IT and finance, interoperability of systems will be a key concern.
ReMetrica provides flexibility in handling data in different formats for both model inputs and outputs, allowing users to interface directly with data warehouses to either read data or write back results.
More than ever, actuarial models will be at the heart of financial reporting, driving the need for increased coordination across actuarial teams.
ReMetrica now supports team working environments, allowing multiple users to load the same models and to work collaboratively while providing sophisticated access control capabilities.
Version control in ReMetrica affords true enterprise level control over the versioning of models, input parameter workbooks and reporting templates. Version control takes the burden of file management away from model architects, freeing them to focus on design and analysis.
About ReMetrica
ReMetrica is Aon's economic capital modelling tool, designed to allow insurance and reinsurance companies to bring insightful, risk based financial modelling to the forefront of the commercial decision-making process. It has been chosen by many of the world's leading insurance and reinsurance companies and actuarial consulting firms. ReMetrica is used to make informed, strategic business decisions. Its powerful modelling capabilities enable clients to test a range of different strategies and scenarios for a variety of applications.
About Aon
Aon plc (NYSE:AON) is a leading global professional services firm providing a broad range of risk, retirement and health solutions. Our 50,000 colleagues in 120 countries empower results for clients by using proprietary data and analytics to deliver insights that reduce volatility and improve performance. Visit www.aon.com for more information.
SOURCE: Aon plc
Tags: Aon, data management, IFRS 17, launch