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Author's profile photo Volker Mohr

Driving Finance Transformation with a Comprehensive Subledger Solution

Insurers are witnessing an unprecedented change in their financial reporting requirements. The recently released Accounting Standards, Targeted Improvements to the Accounting for Long-Duration Contracts from the Financial Accounting Standards Board (FASB), and new regulations such as IFRS 9 and IFRS 17, increase the number and frequency of required calculations and financial statement disclosures. These changes are intended to increase transparency and comparability, and better reflect the economics of an insurer’s transactions, all beneficial improvements. Keeping up with the pace of these changes and new reporting requirements, however, can be daunting.

At the same time, insurers report that fragmented data models are exacerbating reporting challenges. IT departments are struggling to support finance and risk processes. Data fragmentation between operational and finance systems have created redundant accounting rules and interfaces. The longstanding solution of IT departments creating custom interfaces to flow data to reporting and analytic systems and the general ledger is no longer an efficient process. To continue to be successful in the future, insurers need to make strategic investments in infrastructure that streamline processes and enhance capabilities.

Turning Challenges Into Opportunities: Cloud-based Technology Gives Insurers a Competitive Advantage

Facing an increasingly volatile market characterized by rapid change, insurers must harness technology to empower talent and drive business innovation. The right cloud-based technology solution will keep insurers at the forefront of this rapidly changing landscape, giving insurers a critical competitive edge in a complex environment. Cloud-based technology is an immediate solution that provides enhanced value to all stakeholders, including policy­holders, shareholders, employees, and regulators. This technology provides essential data security and scalability for immediate implementation. It serves as a central hub for managing data between operational and finance systems, streamlining accounting flows, enhancing transparency and control, and providing real-time access to actionable data insights.

Subledger Accounting for Insurance Products

The SAP S/4HANA financial products subledger empowers insurance companies to address the complexities of traditional, monolithic architectures. With a state-of-the-art, intuitive interface, this platform is designed to support subledger accounting for insurance contracts and reinsurance contracts. Insurers use the financial products subledger to make valuations at the level of contracts, coverages, or portfolios. The core of this solution is the multi-GAAP accounting engine, which complements a module supporting the preparation of estimated cash flows provided by actuarial upstream systems. The result is a powerful accounting engine that delivers critical data insights and advanced analytics and reporting. SAP also saves insurers time by providing preconfigured content with end-to-end templates that streamline requirement fulfillment for national and international accounting standards, including IFRS 9, IFRS 17 and U.S. GAAP. This accelerates the reporting process and cycle times, all while providing real-time access to critical data insights. Insurers can also create forecasts, plans, and simulations that map how different future scenarios impact insurance contract balance sheets.

An integrated subledger solution for financial instruments and insurance contracts centralizes all accounting rules, bridging the gap between transactional systems and finance applications. Learn more about SAP S/4HANA financial products subledger: Read the Solution in Detail

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