The FASB has proposed to delay LDTI to Jan 2022 for large insurers and 2024 for smaller Insurers.
Similar to IFRS 17, the delay is still only a proposal and has to be approved along with the exposure draft.
“The Board and staff recently performed outreach and operational readiness visits with various Companies” Based on the input provided, there are significant systems and data challenges encountered by insurance companies (including public business entities), as well as concerns regarding the feasibility of the current implementation timeline.”
The proposed date of Jan 2022 applies to SEC Filers, excluding SRCs. The Jan 2024 date applies to all other entities.
Key Changes to Accounting for Long Duration Insurance Contracts Under Us Gaap
LDTI is a significant change for insurers reporting under US GAAP and will have major impacts data, processes and systems. The bulk of the impacts will be felt in the actuarial area and investment will be required to update actuarial models.
This will be a good chance to look at consolidating valuation and projection models, potentially upgrading to new software and taking advantage of new technology such as cloud. Beyond that there is also a chance to look at the overall finance technology and process landscape and upgrade the back office.
Key learnings from previous Change Programs
Don’t Delay
Change programs are often large, complex, multi-year ventures. Insurers delaying any form of action are likely to end up paying bigger costs and face a high risk of not delivering compliance on time, if at all.
Interpretation & Definition
Accounting policy documents are typically large and highly specialised. Insurers will need to ask how they can best interpret these accounting standards, and how then to implement that interpretation.
The Importance of Data
Insurance firms are massive data repositories, representing a huge opportunity. Firms who
fail to invest the necessary time and effort into a full consideration of the data implications will be starting from an immediate disadvantage.
High Performance without Rip and Replace
Insurers are burdened with legacy systems, manual processes and archaic environments that are difficult to change and expensive to maintain. Insurers have the chance to invest in and update their back-office technology to deliver both business and operational benefits.
Collaboration Across Departments
Project and team leads will need to engage and work with senior stakeholders across the organisation – some of whom may underestimate the complexity and resources required.
In an industry that has historically underinvested in Finance and Actuarial systems, getting Executives on-board and behind these change programmes will play a real factor in each project’s success.
Adapting and implementing new accounting standards is complex, time-consuming and expensive.
Legerity’s FastPost platform provides a powerful rules-based engine to handle this increased complexity; with comprehensive data models and massive in-memory compute power – transforming Finance & Risk functions.
April 21, 2022
insightsoftware Acquires Legerity, Adding Cloud-Based Accounting Rules Offering for Complex Financial Transformation
Legerity FastPost Platform brings new capabilities to insightsoftware Consolidation and Close Offerings
April 19, 2022
Accelerate IFRS17 – Industry Workshops for General Insurance
Attend this free workshop and learn how you can accelerate your IFRS17 program.
April 11, 2022
ESG Webinar: The impact of ESG on ROE and effective Climate Reporting for Finance with Roland Berger
Free webinar with experts from Roland Berger and Legerity sharing their latest ESG perspectives, the impact on European banks and insurers and how Finance depts will play a central role in climate impact reporting.
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