Insurers implementing the International Accounting Standards Board (IASB)’s new IFRS 17 will find the process a major challenge due to the huge scale of the operation, according to Willis Towers Watson.

From 2021, insurers across the world will be expected to use the IFRS 17 reporting standard – the first global accounting standard for insurance contracts.

The current standard, IFRS 4, has allowed local Gaap to be used as a guide in each country, leading to little consistency across borders and among multinationals.

The big change under IFRS 17 will be to increase transparency, giving investors a clearer picture of the returns they can realistically expect on investments and the risks involved.

The new rules require companies to recognise profit when insurance services are delivered, rather than when premium payments are received, as well as to provide information about insurance contract profits that are expected to be recognised in the future.

Complying with the new accounting practices is expected to impact profit, equity and volatility, as well as reserving and financial reporting processes, actuarial models, technology systems and, potentially, executive compensation.

The IASB has warned that applying IFRS 17 will require many insurance companies to gather new information, employ or develop people with appropriate skills and make changes to their financial systems.

Companies are also expected to incur costs in educating staff, updating internal procedures and communicating changes in their reports to external parties. Such activities may involve significant time, effort and cost, the IASB said.

Insurance companies are also expected to continue incurring costs in applying IFRS 17 on an ongoing basis. These will mainly arise from gathering the necessary information to update assumptions for measuring insurance contracts on a current basis.

However, carriers with operations in multiple jurisdictions are expected to reduce costs by applying a globally consistent model for their contracts, which will replace the current country-by-country system.

In addition, the new standard will simplify the measurement of some short-term contracts, such as those with a coverage period of 12 months or less, while a carrier will be able to apply the new requirements to a group of contracts, rather than on a contract-by-contract basis.

And IFRS 17 does not apply to some common contracts issued by non-insurers, such as most product warranties.

Kamran Foroughi, director at Willis Towers Watson, said IFRS 17 was more than just an accounting change and would have a wide and significant impact on insurers’ operations.

“The big change under IFRS 17 will be more transparency,” for investors, he continued.

“However, it will take some time for investors to understand the new information.”

Martin Bradley, EY’s global insurance finance, risk and actuarial leader, called the new standard “the most significant change to insurance accounting requirements in 20 years”.

His colleague Kevin Griffith, EY’s global IFRS 17 accounting change lead, added: “While the standard will not become effective for a few years, the impact is likely to be felt much sooner by insurers.

“Investors are likely to ask for expected impacts ahead of the implementation date, and the decisions made by insurers at the date of transition to the new standard will have a significant impact on future profitability.”

Well known City based Insurance Company and Managing Agency with Syndicates requires a Senior Solvency II Risk Analyst to work within risk management department to ensure the Risk Management Framework is appropriately implemented and followed in accordance with the agreed policy.

Key Responsibilities:

• To support the development, implementation and monitoring of ERM systems and processes.
• Support end to end ERM responsibilities for syndicates
• Support the Annual and ad hoc ORSA processes with direction from the CRO. Responsibility for drafting the standard report templates for submission to the boards and regulators
• Support to CRO in keeping all risk owned policies and procedures up to date as required and in line with annual review processes. Support to CRO in creation of new risk policies as required
• Support the CRO in effectively meeting existing and implementing new regulatory requirements by the relevant deadlines (e.g. Lloyd’s min standards self assessment, Solvency II, conduct risk, etc.).
• Consider results of internal audits, compliance reviews and third party reviews for consideration in risk identification and assessment.

Required:

• Previous relevant risk experience in the UK non-life insurance sector at a similar level which will include a good knowledge of Solvency II requirements.
• Educated to degree level and/or risk management qualification
• A high level understanding of capital models
• Experience in using Magique or an equivalent risk management system, and using Microsoft Office and other tools to prepare management reports and presentations.

Leading Lloyd’s managing agency with syndicates require a Risk Manager.

Reporting to the Director of Risk and Assurance with specific responsibilities with respect to Risk Management and the ORSA.

Specific responsibilities include:

• Promoting a risk aware culture across the organisation
• Maintaining the risk management framework and changes thereto as well as the processes and systems for keeping them up to date;
• On-going review of the existing overall risk management process for the firm in conjunction with the Director Risk and Assurance and making recommendations for changes to enhance the process to the Risk Committee.  This will include reviewing the process for routine operational managers to review and reassess the level of risk posed by the functions within their sphere of responsibility and reporting to the Executive Committee and Board from the company wide perspective on the aggregated view of the risk profile;
• Supporting management in the effective operation of the risk management system by either conducting or co-ordinating specialist analysis and quality reviews and the on-going development of risk strategies;
• Keeping the Risk Committees apprised of issues relating to the risk profile of the business and emerging risks which may impact on future operations;
• Promoting a risk aware culture across the organisation;
• Undertaking risk evaluations involving the comparison of estimated risk with risk appetite and evaluating the effectiveness of the firm’s previous management of the risk (Back testing) and assisting with the risk ranking exercise;

Responsibility for element of the Use Test which includes:

• The continued development of the Risk reporting and ORSA process, co-ordination of the assessments and the production of the Risk and ORSA report and reporting to the relevant bodies on the outcomes;
• Ensuring that the risk management process is used appropriately to ensure that the risk profile of the business is properly reflected within the capital models;
• Informing, supporting and verifying the risk management process by reconciling model outputs to the outputs from the risk assessment process;

The ideal person will be someone mathematical with more of an assurance as opposed to operational background.

Hugely successful International insurance company and Lloyd’s managing agency / syndicate looking to recruit a Financial Risk Analyst for immediate start. The successful candidate will be a qualified CFA (Charted Financial Analyst), should possess post qualified experience and have good experience of economic scenario analysis. This role will be based in our client’s offices in the City of London.

Role responsibilities to include: 

• Analysis of  various risks in the investment portfolios and potential impact on the firm’s capital.
• Running stress tests and scenario analysis for current and future expected asset allocations.
• Validation of results produced by the firms internal models,  producing thorough analysis of complex fixed income securities, i.e. asset backed, mortgages, and absolute return funds.
• Reconciliation of risk data derived from internal models with the risk system used by the firm’s investment team.
• Proposing improvements of risk analysis and reporting to the Investment Committee, Lloyd’s and the regulator.    

Our client, a well established insurance business, are looking to recruit an experienced Risk Officer to join their London head office team.

This position is responsible for identifying, measuring, reporting and management of company risks, as well as being responsible for the implementation of Solvency II.

 Key Responsibilities

• To ensure that all company risks are identified, measured, managed and controlled
• To identify, manage and report on all mitigating controls
• To educate all staff in risk management
• To recommend better ways of controlling and reporting risk within the company
• To prepare reports to the PRA on all risk management matters
• To implement the requirements of Solvency II within the company
• To report to the Audit & Risk Committee on a regular basis
• To coordinate with the Board and executive on internal audit requirements

 Qualifications / Experience Required

• Experience in risk management
• Knowledge of PRA requirements
• Knowledge of Solvency II

The successful candidates will have excellent communication skills: written and oral, an ability to discuss and persuade both Executive and junior staff members, the ability to train and advise staff on technical matters, a solid understanding of the business and have an independent mind.