The LDTI challenge

There is a lot of pressure on life insurers to meet the compliance deadline for LDTI. Achieving compliance the old way, using a host of manual resources is nearly impossible with the demands set forth for Long Duration Targeted Improvements (LDTI). LDTI is a new accounting standard introduced by the Financial Accounting Standards Board (FASB). It aims to improve the way insurers account for the long-term contracts they underwrite. While the standard is expected to bring greater transparency and consistency to financial reporting in the insurance industry, it also presents significant challenges for insurers.

One of the main challenges insurers face with LDTI is the complexity of the new accounting standard. The standard requires insurers to use a principles-based approach that relies heavily on management judgment and estimation. As a result, insurers must invest in developing sophisticated models and processes to calculate reserves and other financial metrics accurately. The use of such models and processes, however, can be resource-intensive and time-consuming. The new standard requires insurers to use different methodologies for calculating reserves and other financial metrics when it comes to their financial statements. Last but not least, insurers face new challenges in data management requirements through LDTI. It requires insurers to capture and store significantly more data than before. This data must be accurate, complete, and timely. Insurers must invest in developing robust data management systems to comply with the new standard’s requirements. These systems must be able to capture and process data in real-time and generate reports and insights that can inform decision-making.

Turning regulation into an opportunity

With the extensive requirements for LDTI compliance, forward-thinking insurers are looking to leverage LDTI programs to strategically transform finance and gain significant improvements not only in compliance but also throughout the “record to report” process. SAP Fioneer provides the leading platform to not only achieve LDTI compliance but also to establish a finance and accounting platform that delivers faster and more detailed financial information about your operations, while dramatically reducing the burden of financial reporting. SAP Fioneer not only provides the solution but also implements and supports it for years to come.

Read more about the challenges of LDTI and how SAP Fioneer can solve them in our whitepaper – download it now!

Download the whitepaper

If you’re looking for more information on this topic, we recommend our blog “Better insights, forecasting and transparency with LDTI”.

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