Article by Adrian Everett
The imminent arrival of the International Financial Reporting Standard (IFRS) 17 is no surprise for insurance companies as it has loomed large on the calendar for almost a decade. IFRS 17 is a global standard recognising that insurance contracts involve both financial instruments and service contracts, often delivered over an extended period.
As already reported by Inside SAP Magazine, SAP has co-developed a solution for IFRS 17 compliance with Swiss Re. That solution is SAP FPSL, or Financial Products Sub Ledger, which was released to the market by SAP in January 2019. In co-innovating the solution, Swiss Re has applied over 150 years in the insurance industry to build on the capability of the FPSL predecessor – SAP Insurance Analyzer.
For insurance companies the question arises whether to simply integrate the solution into their existing ERP landscape, or use the change in regulation as an opportunity to re-evaluate the value IT is offering their organisation – an exercise which may lead to more fundamental actions, such as creating a digital roadmap and planning an intelligent ERP upgrade.
Justine Dinnell, Chief Solution Architect of DXC Oxygen, says SAP FPSL is a multi-GAAP solution containing the Financial Service Data Platform, Smart Accounting for Financial Instruments and Profitability & Performance Management.
“IFRS 17 is a drastic disruption for insurance companies as they have never had to provide this level of accountability over each of their products in the past. They are now open to deeper scrutiny and the SAP FPSL solution will guide them as to best practice and ensure compliance.”
However, with IFRS 17 effective from 1stJuly 2022, there is only a limited window of opportunity for insurance companies to implement FPSL – an even tighter window considering the requirement to run comparative data ahead of this date. SAP customers in the financial services sector should be looking to commence their implementation projects as early as possible.
Stuart Dickinson, Director and General Manager, DXC Oxygen, says companies embarking on an FPSL project must ensure their partner has expertise in FPSL.
“At DXC Oxygen we achieve this through our exclusive partnership with ifb group. ifb group was the co-innovator, and responsible for the architecture, of the FPSL solution.”
Dickinson says DXC Oxygen is ideally placed to provide the expertise needed to implement the FPSL solution with minimal time to value.
“But in addition, thanks to our core SAP S/4HANA proficiency, we can also sit down with customers and use the opportunity to have a higher-level discussion about transforming their business with next generation digital technologies.”
SAP FPSL is a centralised hub to manage the data between operational and finance streams. Additionally, FPSL is a multi GAAP compliant solution. SAP FPSL is deployed as an add-on to SAP S/4HANA and is therefore designed with a simplified core for large data volumes. FPSL is delivered to the user via a streamlined SAP Fiori interface.
FPSL is not just for insurance companies, but for the wider financial services industry, including banks, fintechs and reinsurance companies.
Adrian Everett is a founder of Inside SAP Magazine and a Business Manager at DXC Oxygen. Adrian has 18 years’ experience across the Australian SAP ecosystem and has been recognised in the Top 10 Most Influential in SAP.