PwC’s East Africa IFRS 17 readiness survey: Insights for insurers

Transformation, alignment and critical success factors The implementation date for the standard has shifted forward to 1 January 2023 and yet the standard’s complexity must not be underestimated. The implementation journey requires alignment between stakeholders, directors, auditors and various internal functions. It requires upskilling and a review of staff capabilities, and it can also function as a catalyst for broader organisational transformation. The standard presents opportunities to harness data more effectively, to improve the structure of finance and actuarial functions and to generate deeper insight for decision-making within insurance companies. At the end of the day, IFRS 17 is about what story insurance companies want to tell about their companies and they will benefit from taking full advantage of the opportunities that implementing the standard presents. For IFRS 17 implementation to succeed, there are a number of critical success factors. First and foremost, organisations need dedicated, senior-level resources working internally and hand-in-hand with external consultants and software providers. Implementation needs to be spearheaded by someone who has sufficient clout within the organisation and understands the business implications. Choosing the right implementation consultant and the right software is important, but internal coordination and leadership are equally, if not more, important. One of the key takeaways from our survey is that the implementation process needs to be led from the top, starting at the Board level. Leadership then needs to engage with various internal stakeholders and the company’s auditors and knowledgeable external consultants. 52% of our survey respondents believe that their organisation’s stakeholders are clear on the IFRS 17 plans In line with the right resources and leadership, another critical success factor is to dedicate multidisciplinary teams to the implementation projects. Since an audit test of compliance is typically more stringent than a regulator test, it is also very important that organisations involve their auditors from the word ‘go’.

Additionally, IFRS 17 implementation is more likely to be successful if organisations start early. We know that the pool of resources is small, both human resources and appropriate, fit-for-purpose software resources (as well as financial resources). The longer organisations wait, the harder (and more expensive) it is to access the right resources.

A major consideration for insurers as they gear up for IFRS 17 implementation is how to upskill staff. Staff capabilities will play an important role in the successful execution of IFRS 17 projects and these capabilities will need to be developed across the organisation, not just in actuarial and finance functions. According to our survey, insurers in this region intend to use a combination of approaches to do this; the majority of survey respondents will rely on external training by consultants (59%). Respondents also intend to couple this with in-house training (50%), on-the-job training (40%) and vendor training (18%). Another message that comes through clearly from our survey is that regulators in East Africa should come on board early and provide guidance in certain respects, such as by ensuring that there is alignment between the standard’s requirements and regulator guidelines.