Page 201 - India Insurance Report 2023- BIMTECH

India Insurance Report - Series II 189

but it’s also an opportunity for insurers to modernize its operational and infrastructure processes.

5.1. Governance

Owing to the nature and complexity of applying the Standard as well as the radical changes introduced
by the Standard as mentioned earlier, an appropriate governance structure will pay a pivotal role in
successful implementation. As such those charged with governance need to be informed about the key
risks in relation to the implementation of this standard. These involve structure and governance needs
of the implementation project, appropriate project planning, progress reporting and risk monitoring
mechanisms and appropriate communication between the key stakeholders such as the management,
audit team and project leadership.

A strategy for the transition should be developed to establish and track strategic milestones for the
implementation project. The plan should incorporate deadlines and estimated timeliness from various
functions of the business such as accounts, legal, internal audit, external audit and IT to ensure timely
completion of the key activities and phases of implementation.

5.2.Controls

As additional complexities are introduced by the new standard due to the change in estimation,
judgement and modelling along with the frequency at which these estimates are revisited, the insurers
must ensure a robust internal control system over these estimates and judgement, data and valuation
methods. This will vary across the industry depending on the existing infrastructure, level of automation
and current internal control environment. The insurers can address the impact as either an incremental
transformation, i.e. building-on or enhancing the current control framework or a radical transformation
wherein the insurers see an opportunity to redesign their accounting, actuarial and other systems. The
latter will require design and testing of the controls from ground-up.

Additionally, since the Standard introduces more estimation and frequency at which these estimates
are updated, the quality and reliability of data will be important to derive or support these estimates. As
such the insurers will need to source, process and store significantly more data as well as ensure the
completeness and integrity of the data sets used.

Having mentioned the controls and data requirements, the insurers will also need the to consider
the data required to support the opening adjustments in the financial statements upon the implementation
of the Standard.

5.3.Operations

The implementation of Ind AS 117 will also require specific skill and understanding of the application
of the new accounting requirements, i.e. the measurements and transitional adjustments coupled with
the knowledge from other business functions such as actuarial. This will create more emphasis on cross-