Page 202 - India Insurance Report 2023- BIMTECH

190 India Insurance Report - Series II

function interactions while creating challenges for non-accountants to understand the impact of Ind AS
117. Notwithstanding the fact that accountants and actuaries will require further training to ensure a
holistic understanding of the framework, primarily valuation methods, model estimations and reporting.

5.4.Technology

As highlighted previously, the insurers will need a suitable and scalable IT system to comply with
the change in framework. This also provides the insurers and opportunity to examine their existing
technological architecture to develop solutions for the organization in the long-term. Not surprisingly,
there are two ways to fulfill the technological requirements, either through an off the shelf solution
(vendor provided solutions) or through a custom-build internally developed tool. The choice of the tool
deployed is entirely dependent on the requirements, complexity, and budget of the business. Alternatively,
the insurers can also choose to address legacy issues in the system by completely over-hauling its existing
technological solutions. Irrespective of the choice, the following issues should be factored in during the
evaluation of the IT requirements of the business:

• Data storage : All the policy data, market data, assumptions, and CSM and liability numbers need to
be stored in a system versatile enough to group and ungroup policies/cohorts, as needed for the use
of the sub-ledger functionality.
• A robust CSM engine : A robust engine capable of calculating the CSM and liability numbers at the
required level of granularity and then generating the movement analysis and reconciliation of the
numbers for all the prescribed approaches.
• Flexibility : Sub-ledger functionality that works with a standard set of Chart of Accounts (CoA) which
needs to be customizable to the existing set of Chart of Accounts (CoA) that the entity is using.
• Accounting rules : Accounting rules need to be framed for all the prescribed approaches and the
reinsurance contracts held for most scenarios. These accounting rules need to be customizable to
cater to the specific needs of the organization.
• Manual adjustments : The functionality needs to allow for manual adjustments or passing entries apart
from the regular system-generated entries.

6. Conclusion

Considering the challenges posed by the Standard, the solution that the insurers would need to
invest in can neither be a solely actuarial- owned and driven nor an accounting-owned and driven, but a
holistic solution that caters to the needs of both actuaries and accountants. The solution needs to be a
seamless one, without any gaps between the actuarial and the accounting pieces. Any gaps in the solution
can lead to implementation failures, if any of the stakeholders are not comfortable signing off at the time
of reporting.

It’s a journey that all insurers need to go in a planned manner which will give results over a sustained
period.