There have been a lot of discussions in the insurance industry on IFRS 17, the new international accounting standards for insurance contracts.
Introduced in May 2017 and effective in January 2021, the new standards will affect how insurance policies and contracts are assessed. Currently, they are rated only using data available at contracts’ inception. Where under IFRS 17, they will be evaluated based on future cash-flows. The aim is to bring more comparability on contracts, profit sources and quality of earnings.
The implementation of the new standards brings a significant challenge to insurance companies. It is a massive project with substantial risks, as there is not a one-size-fits-all solution. Thus, it is crucial for organisations to get on-board as early as possible to analyse their processes impact and staffing needs.
For employers, there is a challenge to attract well-trained talent. For candidates, there is an opportunity to up-skill and be in demand.
How is the transition to IFRS 17 likely to impact the recruitment of talent?
1. Operations, technology and automation
To comply with the new accounting standards, it is highly likely that insurance companies will need new processes, systems and data. Thus, in-depth gap analysis and reviews of IT operations will be necessary to adapt to the new financial architecture.
IFRS 17 brings an opportunity to insurance companies to go beyond basic compliance and aim operational excellence and streamline their services. For example, implementing new technology could support predictive analytics and automation. Thus, beyond the technical execution, insurance firms will require professionals to help them transition to the new systems and processes. Candidates who are skilled in areas such as process auditing, workflow analysis and automation, people change, and training are likely to be in demand.
2. Balancing Technical and Soft skills
Companies will need access to talent with comprehensive knowledge. Technical skills will be essential, such as insurance accounting, financial reporting and modelling.
However, to transform a business effectively alongside its daily running, professionals would need to invest in their soft skills. Strong leadership and communication skills, as well as the ability to think strategically, would be fundamental.
Also, due to regional complexities of the new accounting standards, professionals will demand robust analytical and adaptability skills. Changes in processes and systems will involve several variables, such as different regulatory frameworks, time zones, markets cultures, and languages.
3. Relevant Insurance Experience
IFRS 17 will impact life and non-life insurance differently. Life insurance will be vastly affected by the changes, due to the long lifespan of the contracts. For insurance contracts that last one year or less, the IFRS 17 rules are still challenging but more simplified. Thus, candidates might seek to acquire specific insurance knowledge. Also for employers, any insurance experience is not a panacea, and specialised insurance knowledge might be required.
The sooner, the better
Given that the global applicability of the new standards, there is a likelihood to result in a global talent shortage. Hiring managers must prepare to widen the scope of their search to find the right candidates. Also, professionals will need to think beyond basic finance and accounting knowledge and work towards developing further skills.
Between now and January 2021, it is likely that you will come across IFRS 17 challenges and opportunities. RED10 would be happy to advise on how to find the right talent or up-skill.