It is tempting to read IFRS 17 as a presentation standard —new statements, new disclosures, a new format— and hand it over to the accounting team. The companies that did so discovered the problem at the first measurement: the standard does not change how the result is shown, it changes how it is calculated.

From the policy to the group of contracts

The unit of account is no longer the product as the business understands it, and becomes the group of contracts, defined by portfolio, expected profitability and year of issue. That regrouping, which takes up one paragraph on paper, in practice forces the rebuilding of traceability between the individual policy and the accounting figure.

New elements are added that did not previously exist as such in the systems: the risk adjustment for non-financial risk, the contractual service margin and its release over the coverage period, and the separate treatment of onerous contracts.

The real project is a data project

• Granularity. The level of detail the measurement requires is usually greater than what policy administration systems retain.
• Actuarial and accounting convergence. Two worlds with their own assumptions, calendars and tools have to produce a single reconcilable figure.
• Calculation volume. Projections by group of contracts and period generate a volume of information that does not fit in a spreadsheet.
• Disclosures. The required movements mean keeping the detail of every period, not just the closing balance.

IFRS 17 is not implemented at the close. It is implemented in the data model that feeds the close.

And then, reporting to the superintendency

The measurement result does not end in the financial statements. It feeds the reports to the relevant superintendency, which applies its own structure and consistency rules. Without a validation layer that checks both worlds —accounting and regulatory— against the same source, the company is exposed to discrepancies that only surface when the supervisor points them out.

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