In the drive to comply with IFRS17, many insurers in Asia found themselves having to rethink their risk management and finance systems. But for China’s Sunshine Insurance Group, implementation of the accounting standard was only the beginning of a wider digital transformation that puts cutting-edge technology at the heart of company strategy.
As a publicly listed insurance company, Sunshine was required to go live with both IFRS9 and IFRS17 in 2023. And the firm was committed to meeting its deadlines in good time.
“We’ve always attached great importance to compliance and accurate accounting,” said Sunshine Insurance Group chief actuary Dan Mao, “and we meticulously planned our implementation project to complete on schedule.”
But beyond timely compliance, there was an even higher objective for Sunshine – to build a new and very modern insurance company.
Hitting compliance targets
When it came to implementing a brand new accounting standard, Sunshine faced many of the same challenges and pressures as fellow insurers across Asia and beyond.
In its blurring of traditional boundaries between the business, actuaries, finance and IT, IFRS17 demands a specialist combination of talents that not all firms could provide. And with few completed implementations under the industry’s belt, there was only a limited number of experienced consultants to fill the gap.
Mr Mao said, “It was a resource-intensive and difficult process which didn’t leave much time for system development and testing. Typically, insurers have to spend a lot of effort preparing their data for IFRS17, and often their systems need a total revamp.”
In Sunshine’s case, FIS Insurance Risk Suite, a world-leading actuarial modeling and risk management platform, provided an ideal solution for IFRS17 calculations and reporting – backed by expert consultants with a strong track record of implementing the standard.
But ultimately, Sunshine’s implementation was a well-coordinated in-house team effort that brought together not only the group’s property and casualty, life and credit insurance subsidiaries, but also its actuarial, finance, IT and leadership teams.
“No one can complete the implementation work alone,” he said, “and it requires the cooperation and integration of all project team members to ensure the successful completion of the project.”
Driving best practice
With the firm’s project management office at the helm and support from both FIS and external accounting consultants, Sunshine steered its compliance initiative to completion ahead of schedule; it finished development and testing of the new IFRS17 system and reporting process by the middle of 2022.
Along the way, the insurer learned important lessons about what makes an effective implementation, not least securing the buy-in and commitment of the senior leadership team – and the expertise of industry leaders.
Mr Mao said, “Top-down management and making business leaders responsible for target setting and decisions on accounting policies are critical, along with timely decision making, rigorous project management, good communication and deploying the right systems and resources.
“To find the systems and external resources that best met our needs, we actively researched the vendors and consultants with both industry experience and pioneering solutions.”
FIS SVP solutions management, insurance and climate risk Martin Sarjeant agreed that Sunshine’s approach is one that other insurers would be wise to follow. He said, “It’s inspiring to see the success that Sunshine Insurance Group has achieved with its IFRS17 implementation.
“By sticking to best practices, the firm gave itself plenty of time for parallel runs, testing and getting the best out of FIS Insurance Risk Suite.”
Moving the business forward
Building on the achievements of its compliance project, Sunshine turned its attention to longer-term improvements and refining not only its regulatory reporting processes but also its wider operations.
As with the IFRS17 implementation, technology was to play a leading role in the company’s new drive toward optimal levels of efficiency and effectiveness. Through intelligent digital operations, powerful data analytics and innovative AI tools, Sunshine was looking to maintain its industry-leading position by advancing almost every aspect of its business.
“To open up the last mile of customer service, Sunshine has continued to increase its investment in technology and drive innovation,” said Mr Mao. “With new technologies supporting our call center agents, simplifying their workflows and improving service levels, we’ve also developed an AI-powered system to provide 24/7 self-service underwriting.
“And for intelligent claims management, we’re using technologies like e-signatures, face recognition and vivo detection to create a first-class customer experience.”
Transforming back-office processes
Sunshine’s transformation, however, doesn’t begin and end in the front office. With collaborative tools supporting remote working, the group has also standardised its business processes across the enterprise and built a stable, scalable and secure platform for storing, sharing, controlling and analysing data.
As Mr Mao said, “The platform aggregates internal and external data to break down barriers and get more value from that data. At the same time, we’ve developed a digital risk control system that uses machine learning and big data analytics to improve risk monitoring, pricing and fraud management.”
For better capital management, Sunshine is digitally transforming and integrating its financial close management, treasury management and asset and liability management (ALM) processes, too.
For Mr Sarjeant, this is a clear example of how companies like Sunshine are harnessing the power of technology to better manage their business as well as achieve compliance.
He said, “As insurers globally look to optimise their IFRS17 processes and move beyond day one compliance, we’ve seen a lot of firms further digitalise and transform their risk systems, for example by strengthening their ALM systems and improving integration with other solutions, such as for treasury management.
“With climate risk disclosures now coming into force around the world, climate risk management is becoming a high priority for insurers, many are also starting to embed climate risks into their ALM models.”
Exploring new opportunities
As technology continues to advance, particularly in the field of AI, the opportunities for Sunshine to transform and improve its business keep coming. The result is a new culture of innovation across the company that’s inspired the development of exciting but secure, flexible and sustainable new products.
Mr Mao said, “We’ve taken the lead in the industry to launch a strategic generative AI project that has built the most advanced hybrid ‘big model’ in insurance. This integrates ChatGPT and other open source models to support innovation and product development across a variety of insurance use cases.
“Additionally, we’ve integrated our digital strategy closely with our business strategy to optimise business processes and the customer experience – and unify our organisation, culture, business model and technology.”
In the view of Mr Sarjeant, this merging of business and technology strategies is now only set to accelerate.
“Insurers have rapidly changed the way they use systems and interact with their customers,” he said.
“The current decade alone has seen firms make amazing technological advances to the tools and processes that power insurance businesses, with the introduction of more cloud-based solutions, video-based underwriting and claims assessment.
“Most recently, there have been even more unprecedented leaps in technology, such as the emergence of GenAI. Tools like ChatGPT offer innovative insurers possibilities that weren’t available just a few years ago, with the potential to transform insurance operations forever.”
Putting customers first
Perhaps the biggest opportunity for Sunshine’s technology strategy is a more customer-centric approach to insurance, which adds value for both consumer and corporate policyholders.
The firm’s strategy for business customers is to meet an ever-increasing demand for comprehensive risk management solutions. For consumers, there’s a quest to match the needs of individuals and families with a more detailed understanding their needs.
In both cases, technology will help accelerate the development of customer-centered operations, provide deeper insights on customer requirements and risks, and improve the ability of sales and service teams to support every stage of the customer life cycle.
“In recent years, customers’ awareness of insurance has been increasing,” said Mr Mao. “So, their demand for more specialised solutions, stronger protection and better service has also increased.
“As the driving force behind building the new Sunshine, technology can help us meet that demand by allowing us to become a more intelligent enterprise. Technology creates value and technology will create the future.” A