Finance, risk and actuarial change

In Insurance

We help insurers meet new regulatory and compliance accounting standards while managing costs, operational efficiencies, and the integration and implementation of systems and data across the finance, risk and actuarial functions.

What EY can do for you

Our dedicated team of finance, risk and actuarial professionals has technical know-how and understands the insurance industry. Working with you, we provide the insights, tools and platforms you need to transform legacy systems, deploy new technology to streamline operations, and connect finance, risk and actuarial functions.

 We have successfully developed solutions that manage the change driven by:

  • Intensifying prudential regulatory regimes
  • Accounting change and the need for finance transformation
  • The need to strengthen and embed risk-management capabilities
  • Rising standards of business conduct or customer interaction, and the compliance agenda
  • Commercial pressures arising from a difficult macroeconomic environment, combined with enhanced regulatory requirements
  • Accounting change

    The implementation of International Financial Reporting Standards (IFRS) 17 and IFRS 9 will bring significant change for insurers. People, processes and systems will be refreshed to meet new standards, and CFOs will assess the strategic impacts of a new reporting framework.

    In addition, developments in capital management and regulatory reporting will require entities to reconcile between multiple metrics on different reporting bases.

    We support clients throughout the accounting change process, with services including:

    • Assessing financial and operational impact assessments
    • Training in the implications of new reporting standards — International Accounting Standards Board (IASB) and Financial Accounting Standards Board (FASB)
    • Developing implementation strategies, road maps and budgets
    • Building new processes and systems
    • Developing the investor story of the future
  • Prudential regulation

    In many countries, the prudential regulation of insurers is becoming more transparent and risk-sensitive, as well as more aligned with the Insurance Core Principles issued by the International Association of Insurance Supervisors.

    New prudential regulatory regimes, such as Solvency II in Europe, frequently follow a “three-pillar” approach:

    • Demonstrating adequate financial resources (Pillar 1)
    • Systems of governance (Pillar 2)
    • Enhanced disclosure (Pillar 3)

    With regulators focused on systemically important companies and those considered “too big to fail,” we can help insurers develop advanced capabilities in critical areas:

    • Recovery and resolution planning
    • Prudential regulation, governance and process
    • Regulation reporting or value, and risk disclosures
  • Commercial optimization

    Intensifying regulations, competitive pressures and market complexity have created new urgency for insurers to optimize organizational structures. Financial pressure is also driving the need for simplification.

    Improving capital efficiency and creating a resolvable structure are among insurers’ top priorities, with overall goals to maximize returns and reduce volatility.

    We work with clients to develop new capabilities, including:

    • Effective articulation of the “investor story” to investors and analysts
    • Enterprise performance management and defining new metrics
    • Capital and corporate structure optimization
    • Insurance investments, with a focus on non-standard asset classes and more effective asset liability modeling
    • Risk management focusing on hedging asset and liability risks, such as interest rate risk and longevity risk
  • Transformation

    For many insurers, finance, risk and actuarial capabilities have grown organically over time. Too often, these new structures are not agile, efficient or aligned to each other or to the business.

    Finance needs to deliver an ever-expanding and complex set of requirements with reliable processes and quality in tight timelines.

    Risk must effectively protect the balance sheet from unexpected risks, while adding value to business decision-making within tight cost constraints.

    Actuarial is a key component of both finance and risk as well as the owner of processes to deliver reserves and capital.

    We support clients in the design and implementation of:

    • Fit-for-purpose finance, risk and actuarial functions capable of meeting the latest regulatory and reporting requirements
    • Efficient finance, risk and actuarial functions underpinned by common data and technology
    • Value-adding finance, risk and actuarial functions capable of engaging effectively with the business
  • Compliance

    Regulatory change and intervention in insurance are on the rise in many markets. Insurers and brokers face challenges in governing and controlling their businesses, managing customers (or in regulatory terms, “managing conduct risks”) and performing remediation when things go wrong.

    We help insurers in four key areas:

    • Assessing the effectiveness of corporate governance and control frameworks
    • Developing conduct risk management frameworks and management information
    • Managing major remediation exercises related to mis-selling
    • Interpreting and applying regulation and legislation

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