Also impacting insurance organizations: SSAP No. 101 best practices, understanding SOC reports, and trends in privacy & security
CHICAGO (June 26, 2014) – Baker Tilly Virchow Krause, LLP (Baker Tilly) uncovered several issues facing insurers during educational sessions presented at the recent 2014 Insurance Accounting & Systems Association (IASA) Educational Conference and Business Show. Key among these issues was the implementation of Big Data, Statement of Statutory Accounting Principles (SSAP) No. 101 and Service Organization Controls (SOC) reporting.
“Big Data is still posing a significant issue for most organizations,” said John Runte, principal with Baker Tilly. “They have so much data that it’s almost paralyzing for them. Organizations have become highly effective at collecting data, now they need to understand how to leverage that information for useful insights into behaviors and trends that impact their organization.”
With the emergence of Big Data, increased competition will force insurers to leverage information as a means to transition from their existing “model-driven” approach to a truly “data-driven” competitor. Businesses are pioneering big data technologies to win and shape their markets, but challenges remain for those trying to break into data analytics and those in the thick of it. Attendees were particularly focused on understanding:
- How organizations can leverage unstructured data from channels such as Facebook comments and Twitter feeds
- The types of vendors able to assist in collecting unstructured social media data and those able to perform discovery and analysis across structured and unstructured data
- The skill sets employers need to look for in new hires to successfully fill analytics positions
View the presentation slides from the IASA conference session online for additional information on these issues and more.
SSAP No. 101
Statement of Statutory Accounting Principles (SSAP) No. 101 brought about significant changes in tax loss contingencies, the admissibility calculation and tax planning strategies. Insurance organizations have been implementing these accounting principles for some time and best practices have emerged from their experiences.
“We have seen some very definite best practices develop from the past few years of implementation,” said Carrie Small, tax director with Baker Tilly. “Insurance organizations have found the common pitfalls and now can work to avoid them by following some best practices such as building in cross-checks and proofs within their SSAP 101 template.”
Other best practices include:
- Comparing reversal patterns from year to year
- Reviewing draft financials before the calculation is final
- Performing high-level analysis of your tax footnote
- Analyzing potential changes in admissibility in future quarters
View the presentation slides from the IASA conference session online for additional key issues to consider under SSAP 101, including challenges and special circumstances within the calculation.
SOC 2 reporting
“Surprisingly, many organizations are struggling more with reading SOC reports received from vendors than implementing their own reports,” said Daniel Steiner, manager with Baker Tilly’s risk consulting team.
While the session discussed the status of proposed updates to the trust services principles and criteria, along with an overview of service organization controls (SOC) 2 trends in general, the greatest area of uncertainty for the attendees was not in their internally generated reports, but in understanding their vendors’ reports.
“They want to know where the most important information is in the report and where they need to be looking for issues,” Steiner said. “As public breaches become more common, clarity into third party internal controls has become increasingly more important.”
View the presentation slides from the IASA conference session online for additional information on SOC 2 reporting.
Baker Tilly also presented on the following topics:
Trends in Privacy & Security: Ongoing privacy and security trends, focusing on how to proactively mitigate data breach and litigation risks. View the presentation online.
MLR Regs Under PPACA: Successes and failures of the medical loss ratio (MLR) regulations based on one company’s experiences and discussion with other health insurers on what they have done to comply with the MLR requirements. View the presentation online.
About Baker Tilly Virchow Krause, LLP (bakertilly.com)
Baker Tilly Virchow Krause, LLP (Baker Tilly) is a nationally recognized, full-service accounting and advisory firm whose specialized professionals connect with clients and their businesses through refreshing candor and clear industry insight. With approximately 2,800 employees across the United States, Baker Tilly is ranked as one of the 15 largest accounting and advisory firms in the country. Headquartered in Chicago, Baker Tilly is an independent member of Baker Tilly International, a worldwide network of independent accounting and business advisory firms in 147 territories, with 33,600 professionals. The combined worldwide revenue of independent member firms is $3.4 billion.