IFRS 17 Implementation Benchmarking Survey 2020

Smart followers need to move faster Contents

Executive summary...... 3

IFRS implementation timeline...... 5

Key findings

1. Implementation and readiness...... 6

2. Budgets and sponsors...... 9

3. Implementation challenges...... 11

4. Technology and providers...... 13

5. Implementation approaches...... 16

6. Investor relations and IFRS 17...... 21

Lessons learned from successful implementations...... 22

Contacts ...... 23

2 | IFRS 17 Implementation Benchmarking Survey 2020 Executive summary

The results of EY’s IFRS 17 Implementation findings relative to the challenges and current readiness levels for entities in different regions and at different stages of the project. Benchmarking Survey 2020 confirms that It also includes recommended actions for how insurers can move the new standard is proving to be quite a forward on their IFRS 17 implementation journeys. challenge for most insurers. For further insights into IFRS 17, including how your organization compares to these research results, please contact your local EY This is not surprising, given that IFRS 17 is the most significant representative (see page 23). change to insurance accounting requirements in over 20 years (see sidebar).

Along with the complexity of the standard, the uncertainty About the EY IFRS 17 about the elements of IFRS 17 that are not yet finalized makes implementation extremely difficult. Significant investments of Implementation Benchmarking both cash and management time are required. Even though the implementation deadline has been extended again, there is clear Survey 2020 urgency for insurers to finalize implementation planning and move Objective: Understand where insurers are in their implementation on to executing those plans. journeys and identify the common challenges and focus areas for the market The survey findings clarify the state of IFRS 17 readiness on the front lines of implementation. The clear takeaways for insurance number of participating insurers (including life, composite, leaders in charge of implementation programs include: 45 reinsurance and non-life businesses) • 66% of respondents classified themselves as “smart followers.” With the exception of some large global insurers, countries across Europe, Asia and the Americas most insurers are behind where they need to be in their 19 implementation project. Notes: • The size of budgets varies widely and depends largely on the • Data about budgets and software and technology vendors featured complexity of the business, as well as different definitions of in this report includes both survey results and inputs from other IFRS 17 costs. Given the large number of unknowns in IFRS 17 EY research. implementation, the overall spend is likely to be much higher • Findings are based on the expected effective date of 2022, which than originally estimated. is based on the proposed amendment in the June 2019 Exposure • Data and systems are top of mind as insurers plan their IFRS Draft (ED). 17 implementations. Significant data must be processed and stored to meet the new measurement and reporting requirements. Sourcing quality data at the level of granularity required by IFRS About IFRS 17 17 is proving to be the most significant implementation challenge. In May 2017, the International Accounting Standards Board • More than 50% of insurers have not yet selected an IFRS 17 (IASB) issued IFRS 17 Insurance Contracts (IFRS 17, or the system or vendor. For those that have, there are a few leaders standard) — the most significant change to insurance accounting among the system vendors available. All software solutions are requirements in over 20 years. still works in progress that present a degree of risk at this stage of development. At the time of publication, IFRS 17 is still not finalized, and the final amendments are expected to be issues in the second The following report provides more detail into these and other quarter of 2020. However, following the IASB Board meeting in March 2020, the IASB confirmed the effective date of IFRS 17 has been deferred to 1 January 2023.

3 | IFRS 17 Implementation Benchmarking Survey 2020 IFRS 17 Implementation Benchmarking Survey 2020 results confirm that there is much work for insurers to do, especially relative to data challenges.

of respondents classified themselves 66% as “smart followers”

of respondents have completed detailed 14% planning with 32% significantly advanced 54% are in the early stages of planning have completed the implementation and 11% testing phase

of insurers that have made a vendor decision have opted for Sub-Ledger solutions as their 80% preferred IFRS 17 solution

the position of granularity required for IFRS 17 reporting and measurement among all #1 data sourcing challenges

of respondents plan to mitigate resource 45% shortages with the use of consultants

4 | IFRS 17 Implementation Benchmarking Survey 2020 IFRS 17 implementation timeline assuming an implementation date of 1 January 2023

Phase 2: 2020 Phase 3b: 2021/2022

Solution End-to-end test Phase 5: 2023 design and validate Full IFRS 17 • Deploy IFRS resources • pate o actuarial moels complete BAU reporting • Develop accounting policies • pgrae o systems complete • IFRS go live • Complete etaile • Integrate test prouction environment • Develop YE 2021 IFRS gap analyses • Create yearen (YE 2019 test 17 balance sheet • Create business requirements balance sheet with comparatives ocument • Develop quarterly proorma • Develop YE 2021 IFRS • Decie on technology platorms statements an isclosures 17 isclosures • Complete venor assessment • Provie training on requirements, • Execute quarterly systems an processes or testers • Develop IFRS prouction runs reporting solutions • Complete systems integration testing • Perorm project close • Design solution architecture an user acceptance testing • Close IFRS 4 reporting • Develop transition to parallel • Develop etaile an archive reporting environment implementation roamap environment • Develop target operating 1 January 2021 1 January 2022 moel (TM YE 2020 opening Previous 1 January 2023 May 2017 balance sheet implementation deadline Delayed • Buil assumption implementation deadline IFRS 17 Issued management capability Original implementation deadline

2017 2018 2019 2020 2021 2022 2023

Phase2 Phase 1: 2017–2020 Phase 3a: 2021 Phase 4: 2022 Impact Build and Transition and assessment unit test parallel runs

• Analysis o IFRS requirements an implications • Review timeline or changes ue to • Implement TM elaye implementation ate • Complete ﬁnancial and operational impact analyses • Perorm parallel quarterly runs o en • Develop initial gap analyses • pgrae ata warehousing capabilities to en IFRS reporting process • Decie on contractual service margin (CSM • Complete enterprise ata lake an • Create YE 2020 opening balance sheet ata interaces development (actuarial vs. ﬁnance-driven) • Develop quarterly proorma statements • Develop IFRS implementation buget an resources • Design an implement accounting an isclosures rulesjournal entry logics • Develop high level implementation roamap • Provie training on requirements, • Develop CSM engine systems an processes • pate actuarial moels • Provie training on requirements, • pate chart o accounts (CA an systems an processes or go live an analysis o earnings business as usual (BA • Document accounting policies, • Transition to go live an BA jugments an methoologies • Develop proorma statements an isclosures • Embe governance an controls throughout organiation

5 | IFRS 17 Implementation Benchmarking Survey 2020 Key finding 1 Implementation and readiness: Most insurers are lagging in their implementations and are unsure about meeting the deadline

Most survey respondents have classified themselves as “smart How would you classify your company’s response to IFRS 17? followers.” However, the reality is that most insurers are behind where they need to be. Only 60% have completed gap analyses and impact assessments. Only slightly more than 10% have Involuntary Leader significantly advanced into implementation and testing. laggard 20% Larger insurers tend to be further along in build phases 5% compared to their smaller peers. Almost all large insurers have reached the build phase in their implementation programs, and some implementation “leaders” — primarily in Asia and Europe Purposeful laggard — are in the execution and dry-run stage. Compared to European Smart follower insurers, Asian organizations tend to be slightly more advanced 9% in phases 1 and 2 of implementation. 66%

To ensure readiness for the implementation date, it’s important that insurers continue with their implementation efforts and do not fall any further behind with their programs.

Where are you in the following implementation phases? (Answers as of July/August 2019)

Not starte Starte Signiﬁcantly advanced Complete

Phase 1 gap analysis an impact assessment

2% 14% 25% 59%

Phase 2 etaile planning an esign

9% 45% 32% 14%

Phase 3a implementation an testing

48% 39% 11% 2%

Phase 3b transition an parallel run

82% 16% 2%

Phase 4 postimplementation support

*Based on responses from July/Aug 2019 98% 2%

6 | IFRS 17 Implementation Benchmarking Survey 2020 Key finding 1: implementation and readiness

During the course of this survey, the implementation deadline for At this point in their implementation programs, the majority of IFRS 17 tentatively changed to the effective date of 1 January insurers should be at a stage just before dry-runs; however, most are 2022. However, the uncertainty around readiness is still concerning a long way from this point. despite the new timeline. It’s important that insurers allow and plan Asian insurers are slightly further along than their European for contingencies and delays in their implementation programs to counterparts, and are significantly advanced in systems rebuilds and ensure readiness. testing, operating model design and implementation phases. This is IFRS 17 can lead to fundamental changes in the financial results, largely due to the increased level of regulatory scrutiny in some and companies need to fully understand all aspects of the changes Asian countries. before they are released to the public and investors. Insurers need to accelerate their IFRS 17 programs to allow time during the dry- run phase to fully understand changes to the numbers.

Where specifically are you with each of the below topics?

Not starte Starte Signiﬁcantly advanced Complete

Accounting policies an impact assessment 7% 45% 43% 5%

Datauser requirements 9% 57% 25% 9%

Systems ecision on venorinhouse buil 7% 39% 20% 34%

Financial impact analysis 23% 55% 18% 5%

TM esign 39% 41% 16% 5%

TM implementation 73% 16% 7% 5%

Systems rebuil, test an implement 50% 39% 7% 5%

Process reesign 48% 45% 2% 5%

Dry runs 84% 9% 5% 2%

Transition 73% 25% 2%

Parallel runs 93% 5% 2%

Do you think you’ll make the deadline to run parallel runs successfully one 25% year before the adoption date? nsure 59% Yes 16% No

7 | IFRS 17 Implementation Benchmarking Survey 2020 Key finding 1: implementation and readiness

IFRS 17 has a big impact across the organization

The majority, if not all, of the elements of the IFRS 17 implementation process will have a significant impact on the business due to the effort, changes and investment required to ensure readiness for the implementation deadline.

What is the expected impact based on the anticipated amount of effort/changes needed as a result of IFRS 17?

Low Meium igh

Parallel runs 5% 39% 57%

Target operating moel changes 14% 45% 41%

Project an change management 9% 30% 61%

Other systems (policy admin, data warehouse, etc.) 23% 27% 50%

Actuarial ata an systems 25% 75%

Finance ata an systems 20% 80%

Actuarial process reesign 39% 61%

Finance process reesign 39% 61%

Technical accounting 5% 9% 86%

Actuarial 16% 84%

8 | IFRS 17 Implementation Benchmarking Survey 2020 Key finding 2 Budgets and sponsors: Budgets vary, but CFOs typically lead on IFRS 17

Global IFRS 17 budgets vary depending on the size of the business, Many insurers still do not know the final cost of IFRS 17 and geographic spread. The key determining factors include: implementation, due to multiple uncertainties throughout their implementation journey and insurers are finding that budgets can • Company size grow during the project. • Number of operating countries Some insurers, mainly larger organizations, are using IFRS 17 as • Business complexity (type of products) a driver for wider finance transformation programs, and therefore • Ability to leverage work performed for Solvency II (or other increasing the budget. However, this increase in spend will result economic balance sheet models) in a larger benefit than solely IFRS 17 compliance. For those that implemented Solvency II, 60% believe that IFRS 17 will cost more than Solvency II, and fewer than 20% believe it will cost less.

Small an udet drvers meium as one Number o Company Sample insurers Solvency II operating sie1 sie Project buget sie (SDm or not countries

Yes 1020 SM 3

Yes 110 SM 8

No NA SM 8

0 25m 50m 100m 150m 200m

Large udet drvers insurers as one Number o Company Sample Solvency II operating sie1 sie Project buget sie (SDm or not countries

Yes 20 L 6

Yes 1020 L 5

Yes 110 L 2

No NA L 4

0 100m 200m 300m 400m 500m

Lie insurers Composite insurers PC insurers

1 Size L means three-year average gross premium is greater than USD$10bn and Size S/M means three-year average gross premium is less than USD $10bn 2 Project budget of peers is based on EY’s own research supplemented with publically available information; some of the budgets require further validation

9 | IFRS 17 Implementation Benchmarking Survey 2020 Key finding 2: budgets and sponsors

Senior-level sponsorship is necessary for IFRS 17 implementation programs, to create the urgency to drive insurers over the finish line in time for the deadline. At nearly three out of four insurers, CFOs are leading the implementation programs which is what we would expect to see to ensure readiness.

Who is leading your IFRS 17 program (as the overall project sponsor)? 5% ther 9% A combination

2% 73% Head of ﬁnance change CF

7% Finance controller 5% Chie actuary

10 | IFRS 17 Implementation Benchmarking Survey 2020 FIGURE 1 KeyWhat finding are 3 the major challenges aroun ata (scale 1-5, 5 being biggest challenge) Implementation challenges: Data complexites top the list 3.2 4.2 4.4 4.9 Data in btaining Level o Level o A number of theierent significant data requirements for implementationhistoric Historical policygranularity data may have been recordedgranularity on multiple are still open to interpretation.ormats Obtaining data and informationata on systems, resultingrequire in sourcing data being extremelyrequire difficult, and contracts written years ago is proving difficult for some insurers. will require data migration. In this situation, insurers can opt to take the modified retrospective approach or fair value approach One of the key data challenges for IFRS 17 is that historical data under the IASB guidelines. 1is required for calculating the CSM, dating back to inception. This 5 requires access to: At the IFRS 17 group level, insurers will need assumptions for each reporting period from policy inception. However, when writing • Policy data 3.2 4.3 4.5 contracts in the past, insurers did not know this information would • Pricing Timliness beLegacy required, system and the relevant data may not Sourcinghave been ata kept, or may • Expected profitability of contracto accessing at time of issue beissues stored on historical redundant systems. rom multiple ata ata epartments This lack of reliable historical data presents a huge challenge in IFRS 17 implementation. More than 50% of insurers believe they will not be able to use the retrospective approach due to the incompatibility with current data systems.

What are the major blockers/challenges to completing IFRS 17?

3.2 4.1 5.7 7.1 7.7 Target operating Project an Actuarial Actuarial Finance ata moel changes change process an systems management reesign 1 10 Least Most challenging 3.2 5.2 5.6 6.6 7.6 challenging Parallel ther Finance Technical Actuarial ata runs systems process accounting an systems reesign

11 | IFRS 17 Implementation Benchmarking Survey 2020 Key finding 3: implementation challenges

IFRS 17 implementation is complex, and successful implementation able to articulate how data flows from the source to the end-point, requires a high level of granularity. Most of the complexity in IFRS using a data lineage model. This model maps data back to systems 17 implementation lies in front-end data sourcing, provisioning, and data sources. At “go-live,” insurers will need to walk between quality and data models, and it’s important that insurers have an IFRS 4, IFRS 17 and Solvency II, and a clear data lineage model will understanding of these complexities. The insight into these data make the implementation process easier. challenges will save time and resources in the long term. At this point in their journey, most insurers do not yet know the exact The majority of insurers will use vendors for a system build, and to data problems they will face, as many are relying on mock data for effectively engage with vendors, IFRS 17 project leads need to be testing rather than the use of live data.

FIGURE 1 What are the major challenges aroun ata What(scale are 1-5, the 5 major being biggestchallenges challenge) around data? (scale 1-5, 5 being biggest challenge)

4.9 Level o 4.5 granularity require Sourcing ata rom 4.4 multiple epts Accuracy an cleaning

4.3 Legacy system issues 4.2 historical ata btaining historic ata 3.2 Data in ierent 3.2 ormats Timeliness o accessing ata

12 | IFRS 17 Implementation Benchmarking Survey 2020 Key finding 4 Technology and providers: Insurers are carefully considering their system and vendor options

Insurers indicated that support from vendors is a key criteria for Insurers highlighted that vendor products and solutions are very much successful implementation, and insurers should begin vendor work a “work in progress” as the standard develops and implementation with a pilot project in a representative business unit first. However, progresses. For some insurers, technology can be seen as too “out- the assumption that a solution can be easily scaled and used in other of-the-box” or not as robust as promised. With over 80% of insurers territories remains to be confirmed. stating the functional capabilities of the software is very important, it’s vital that the vendor solution chosen has the capabilities required for Insurers need to think carefully about roll-outs in individual countries, successful implementation. and investigate the re-usability of vendor solutions. IFRS 17 implementation is a project that spans across many functions When working with external suppliers, it’s important that insurers including accounting, actuarial and IT. It’s important that internal teams clarify who is responsible for what during each phase of the project. are coordinated and have clarity around which deliverables are owned Data availability and quality are the common factors underpinning the by whom. success of all technology builds.

How important are the following criteria when choosing an external technology provider?

Not important Low importance Neutral Moerately important Very important

Functional capabilities o sotware 2% 16% 80%

Ability to interace with 34% 59% existing systems an tech 2% 5%

Cost 2% 18% 36% 43%

System perormance 2% 16% 41% 41%

Geographic ootprint 9% 7% 9% 41% 34% local support o provier

Prouct that covers Solvency II riskbase capital regimeIFRS 17 20% 7% 39% 18% 16%

13 | IFRS 17 Implementation Benchmarking Survey 2020 Key finding 4: technology and providers

Through our work with insurers globally, we are tracking the vendors At this stage in development for software solutions, there is a degree chosen across over 120 insurers. More than half of these insurers of risk. As IFRS 17 implementation develops, complexities will arise. have not yet selected their IFRS 17 system or vendor, and from those Therefore, there is no “one-size-fits-all” solution, and many options that have chosen, it is clear there are three preferred vendors. require substantial tailoring. As such, insurers should anticipate the build phase taking up to 50% longer than planned, based on the Of those that have selected their IFRS 17 system, the majority have complexities seen in system build projects to date. adopted the sub-ledger approach, with a few vendors dominating. Other vendors are gaining popularity among general insurers In order to minimize the risk and delays, it’s important that insurers and smaller insurers that are less focused on bespoke solutions. outline exactly what they need from a solution, and choose a vendor Alternatively, some insurers are exploring actuarial-driven solutions. based on these needs.

Global vendor solution choices for IFRS 17 technology provider

4% 4% Venor A Vendor B

18% 29% Venor F Venor C

24% Venor E 22% Venor D

14 | IFRS 17 Implementation Benchmarking Survey 2020 Key finding 4: technology and providers

In evaluating their options, insurers should decide what specific The insurers who are most advanced in their IFRS 17 implementation problem they are trying to solve and pick their IFRS 17 vendors projects tend to have built their own system. While this approach accordingly. The focus should be on what systems need to do, not has enabled speed in implementation, manual workarounds have what could potentially be done with them. At this stage, the first an inherent risk. A self-built system presents risks around reliance priority must be delivering a viable system. Insurers shouldn’t look on the specific individuals who designed it and developed the code. at IFRS 17 in isolation from broader finance transformation projects; Vendor systems will minimize this risk. both will be tapping into the same scarce IT resources to achieve It’s important that insurers think about how systems will be used in similar aims. Thus, they will mutually benefit from aligning the future; users of the final system should be involved in the original wherever possible. system design and build. Embedding accountants and actuaries onto development and build teams has been particularly valuable for insurers who have taken this approach to date.

What are you looking for from your IFRS 17 system?

66% 14% 14% 7%

Entoen solution CSMPAA ther MultiGAAP (incluing CSM, isclosure engine only reporting capability management, etc.)

Are there any other important criteria when choosing an external technology provider?

Functionality an perormance 16%

Demonstrate expertise an experience in market 14% Customer service oere by venor 5%

Language 2%

Compatibility 2%

nanswere 61%

15 | IFRS 17 Implementation Benchmarking Survey 2020 Key finding 5 Implementation approaches: Insurers are taking varied approaches in navigating the many implementation details

Insurers are taking a variety of approaches when navigating IFRS For a successful IFRS 17 implementation project, insurers should take a 17 implementation. Nearly 40% of insurers are running a primarily content-led approach, with accountants and actuaries heavily involved centralized project, while 25% have a centralized group governance in all aspects of the project, alongside experienced business analysts model, but with decentralized implementation. for support.

Are you running a centralized or decentralized IFRS 17 implementation project? 2% ther 39% Primarily centralie 20% implementation NA 5% avent ecie yet

25% 9% Centralie guielines Primarily ecentralie coordination (group governance) implementation with ecentralie implementation

16 | IFRS 17 Implementation Benchmarking Survey 2020 Key finding 5: implementation approaches

Engagement with auditors is key to success

Insurers should engage with auditors on accounting policy changes that will influence the systems build before the build workstream is significantly advanced. Attempting to backtrack later and rebuild parts of the system will cause unnecessary delays and complications.

Have you already actively engaged with your auditors on accounting policy changes?

Yes 50%

No planning to in 2019 20%

No planning to in 2020 18%

No unsure o when we 11% will engage with auitors

What’s the level of assurance you’re expecting on technical requirements and operating procedures from internal audit or external audit during the IFRS 17 program?

Substantial Limite 64%

25%

9% 2%

Internal auit External auit

17 | IFRS 17 Implementation Benchmarking Survey 2020 Key finding 5: implementation approaches

Controls and internal audit will play an important role in managing manual workarounds in the IFRS 17 process. While survey responses suggest limited involvement by internal audit to date, that group should be more actively involved. Internal audit will establish governance and provide assurance throughout the implementation process, creating essential controls and processes around the system build and any manual workarounds. A significant number of insurers have progressed work on COA.

Will you have to use workarounds and spreadsheets What % of book of business will require manual in parts of the business to ensure required data is interventions? accurate and clean for your dry runs? 0 10% 14%

Yes 43% 10 20% 9%

20 30% 5%

No 7% 30 40% 7%

40 50% 2% Dont know yet 50% nanswere 64%

Have you started work on your IFRS 17 COA? How complete is the work?

Yes 64% 100% 21% complete

No 5% 75% 32% complete Plan to start 20% in 2019

50% 18% No plan to start 9% complete beore 2020

nsure o planne 2% 25% start ate complete 29%

18 | IFRS 17 Implementation Benchmarking Survey 2020 Key finding 5: implementation approaches

Insurers have not made much progress in IFRS 9 implementations. IFRS 17 and IFRS 9 are interrelated and will be implemented at the Insurers with a global reach are more likely than the full peer group same time. Thus, we recommend strong communication between to be running a combined project for IFRS 17 and IFRS 9; 60% of both projects and combined dry runs and testing where possible. It global insurers have a combined IFRS 17 and IFRS 9 project vs. 43% is also important to bring together IFRS 17 and IFRS 9 impacts when of the total peer group. performing financial impact analyses.

How are you treating IFRS 9 and IFRS 17 projects?

2% Dont know yet

43% Combine

55% Separate

With the standard being delayed by one year, what has been the impact on your project?

2% 2% None, not yet starte ther 14% Reassess an look to implement with wier organiational change 82% Continuing at the same pace an proviing contingency in our plans anor will be use or more testing

19 | IFRS 17 Implementation Benchmarking Survey 2020 Key finding 5: implementation approaches

Insurers are taking a range of approaches to mitigate the people Contract delays in between project phases can make it difficult to skills shortage in their organizations. There is evidence of an retain the same team all the way through implementation, which can inflationary effect on salaries as insurers fight to retain and attract further compound the resourcing issue. staff that are experienced with IFRS. Insurers are trying to find the In order to mitigate this resource gap, insurers are looking to right balance between internal and external resources, with 62% of consultants to aid their IFRS 17 implementation program. Not only resources coming from within the organization and 38% coming from does this provide a continuous resource, but also external knowledge outside. As with Solvency II, the use of external resources generally from those that work with peers in the insurance industry. tends to increase as the implementation program develops.

How do you plan to mitigate the people skills shortage in your organization?

45%

18% 14% 9% 9% 2% 2%

Consultants Aggressively Contractors pskilling Combination o Salary No response hiring existing sta contractors, increases consultants an hiring

20 | IFRS 17 Implementation Benchmarking Survey 2020 Key finding 6 Investor relations and IFRS 17: Storytelling becomes critical as KPIs shift

The implementation of Solvency II saw significant movements in Companies also need to think about credit ratings, long-term incentive the financial performance numbers of insurance companies. These plans and employee performance plans that are based on old IFRS changes were difficult to explain to investors. IFRS 17 carries a risk of targets, as well as what these will look like under IFRS 17. similar shifts on the balance sheets and P&Ls, which will need careful Investors have historically found it challenging to compare financials explaining to investors. Only 14% of the respondents to our survey had between insurers in different geographies. They expect that this will worked with their investor relations department to look at potential be easier to achieve under IFRS 17, with more current, accurate changes to key performance metrics (KPIs). and transparent financial data. However, the economics behind the Investors will be focused more on the drivers of performance going numbers and the fundamentals of the business model are not changing forward and will likely pose more sophisticated questions and and remain a key part of the investor story. challenges to the organization, including:

• ►How do I navigate the income statement?

• Where do earnings come from?

• How to consider returns on investment: dividends, IFRS equity, return on equity, growth?

• What are the impacts on solvency and ratings?

• How stable and predictable are earnings?

• What are the margins? Are these comparable to IFRS 4/US GAAP equivalents?

• ►What new indication does the CSM give in terms of valuation? Do insurers need to keep the embedded value as a metric or will it be replaced by IFRS 17?

Are you already working with your investor relations department on the investor story 14% including potential changes to your KPIs? Yes 39% No 48% No but planne activity

21 | IFRS 17 Implementation Benchmarking Survey 2020 Lessons learned from successful implementations

Based on the survey feedback and our observations from across the industry, we believe there are four key factors for a successful IFRS 17 implementation:

Collaboration Given the complexity of IFRS 17, a collaborative approach is vital. Successful 1 programs ensure that data, technology and vendor teams work closely with the accountants, actuaries and business leadership. Overall project teams are structured to achieve collaboration. This requires participants to understand the context around how policy decisions result in data flows through actuarial and accounting systems to final disclosures.

Agility Insurers cannot wait for all the uncertainties and unknown components 2 of IFRS 17 to settle. An agile approach provides the flexibility to respond to developments and changes as they occur. Implementing IFRS 17 is like trying to cross a bridge while building it. Understanding potential risks and likely responses is key to maintain progress.

Realistic expectations Given the time and budget available, a practical sense of possibility is 3 helpful. Managing expectations is not easy and needs careful validation and senior management buy-in to achieve successful implementation. It’s important to have realistic expectations when selecting a vendor solution. An “out-of-the-box” solution is never going to be ideal for each organization’s specific circumstances. Thus, it’s important that insurers are prepared to work with vendors to tailor the solution for the business.

A focus on the final outcomes 4 Insurers must clarify their goals for the investments in IFRS 17 implementation. Is baseline compliance the primary objective or is there an opportunity to help transform the actuarial and finance function? Moving beyond minimum compliance and towards transformation can maximize the investment both in management time and cash. Such goal setting is best handed while there’s still time to capture the potential business benefits.

22 | IFRS 17 Implementation Benchmarking Survey 2020 Contacts

Kevin Griffith Global IFRS 17 leader +44 20 7951 0905 [email protected]

Area IFRS Contacts

Global Jean-Michel Pinton Luxembourg +33 6 84 80 34 79 Jean-Michel Pacaud Martina Neary [email protected] +352 42 124 8570 +44 20 7951 0710 [email protected] [email protected] Germany Thomas Kagermeier Netherlands Conor Geraghty +49 89 14331 25162 Hildegard Elgersma +44 20 7951 1683 [email protected] +31 88 40 72581 [email protected] [email protected] Markus Horstkötter Hans van der Veen +49 221 2779 25 587 Bouke Evers +31 88 40 70800 [email protected] +31 88 407 3141 [email protected] [email protected] Europe, Middle East, India Robert Bahnsen and Africa +49 711 9881 10354 Portugal [email protected] Ana Salcedas Philip Vermeulen +351 21 791 2122 +41 58 286 3297 Greece [email protected] [email protected] Konstantinos Nikolopoulos +30 2102886065 Poland Thomas Kagermeier [email protected] Marcin Sadek +49 89 14331 25162 +48225578779 [email protected] India [email protected] Rohan Sachdev Belgium +91 226 192 0470 Radoslaw Bogucki Katrien De Cauwer [email protected] +48225578780 +32 2 774 91 91 [email protected] [email protected] Ireland James Maher South Africa Peter Telders +353 1 221 2117 Jaco Louw +32 470 45 28 87 [email protected] +27 21 443 0659 [email protected] [email protected] Ciara McKenna Czech Republic +353 1 221 2683 Spain Karel Svoboda [email protected] Ana Belen Hernandez-Martinez +420225335648 +34 915 727298 [email protected] Italy [email protected] Matteo Brusatori France +39 02722 12348 Switzerland Frederic Pierchon [email protected] Roger Spichiger +33 1 46 93 42 16 +41 58 286 3794 [email protected] Israel [email protected] Patrick Menard Emanuel Berzack +33 6 62 92 30 99 +972 3 568 0903 Philip Vermeulen [email protected] [email protected] +41 58 286 3297 [email protected]

23 | IFRS 17 Implementation Benchmarking Survey 2020 Turkey US Taiwan Damla Harman Evan Bogardus Angelo Wang +90 212 408 5751 +1 212 773 1428 +886 9056 78990 [email protected] [email protected] [email protected]

Seda Akkus Chris Raimondo Korea +90 212 408 5252 +1 312 879 2835 Keum Cheol Shin [email protected] [email protected] +82 2 3787 6372 [email protected] UAE Raj Ramani Sanjay Jain +1 201 551 5039 Suk Hun Kang +971 4312 9291 [email protected] +82 2 3787 6600 [email protected] [email protected] Asia Pacific UK Jonathan Zhao Malaysia Brian Edey +852 6124 8127 Jeremy Lim +44 20 7951 1692 [email protected] +60 3 238 89036 [email protected] [email protected] Martyn van Wensveen Nick Walker +852 318 94429 Philippines +44 20 7951 0335 [email protected] Charisse Rossielin Y Cruz [email protected] +63 2 8910307 Australia [email protected] Shannon Ramnarine Kieren Cummings +44 20 7951 3222 +61 2 9248 4215 Singapore [email protected] [email protected] Vanessa Lou +65 6309 6759 Alex Lee Brendan Counsell [email protected] +44 20 7951 1047 +61 2 9276 9040 [email protected] [email protected] Japan Hiroshi Yamano Americas China (mainland) +81 33 503 1100 Argentina Andy Ng [email protected] Alejandro de Navarette +86 10 5815 2870 +54 11 4515 2655 [email protected] Norio Hashiba [email protected] +81 33 503 1100 Bonny Fu [email protected] Brazil +86 135 0128 6019 Eduardo Wellichen [email protected] Toshihiko Kawasaki +55 11 2573 3293 +81 80 5984 4399 [email protected] Hong Kong [email protected] Doru Pantea Nuno Vieira +852 2629 3168 Survey support +55 11 2573 3098 [email protected] Sally Connor [email protected] Tze Ping Chng +44 20 7783 0699 +852 2849 9200 [email protected] Canada [email protected] Janice Deganis +1 5195713329 Steve Cheung [email protected] +852 2846 9049 [email protected] Mexico Tarsicio Guevara Paulin Martyn van Wensveen +52 555 2838687 +852 318 94429 [email protected] [email protected]

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EY is a leader in serving the financial services industry We understand the importance of asking great questions. It’s how you innovate, transform and achieve a better working world. One that benefitsour clients, our people and our communities. Finance fuels our lives. No other sector can touch so many people or shape so many futures. That’s why globally we employ 26,000 people who focus on financial services and nothing else. Our connected financial services teams are dedicated to providing assurance, tax, transaction and advisory services to the banking and capital markets, insurance, and wealth and asset management sectors. It’s our global connectivity and local knowledge that ensures we deliver the insights and quality services to help build trust and confidence in the capital markets and in economies the world over. By connecting people with the right mix of knowledge and insight, we are able to ask great questions. The better the question. The better the answer. The better the world works.

This material has been prepared for general informational purposes only and is not intended to be relied upon as accounting, tax or other professional advice. Please refer to your advisors for specific advice. ey.com/fsminds