One in three global insurers budget over €50m for IFRS 17 implementation
Despite challenges, 90% of insurance firms are confident they will be compliant by the 2021 effective date.
NEW YORK, NY, USA, 18 July 2018—More than one in three (35%) global insurers are budgeting over €50m (£44.2m) as they move towards IFRS 17 implementation, according to Deloitte research published today. IFRS 17 goes live as the new global accounting regulation on 1st January 2021.
The research, which was prepared by the Economist Intelligence Unit, also highlights a significant focus on technology spend for global insurers. It finds that 87% are expecting to upgrade their systems in advance of the 2021 effective date.
Francesco Nagari, global IFRS insurance leader at Deloitte, said:
”The long awaited Standard, released in May 2017, aims to establish one set of financial reporting requirements for all types of insurance contracts. However, to achieve compliance insurers need more granular data and more extensive calculations, going significantly beyond the information required for current accounting practices. The findings of our survey demonstrate that many more insurers are now working extensively and with substantial budgets to be compliant in time.”
Deloitte’s research five years ago, prior to the final Standard being released, revealed that just 7% of insurers expected to spend more than €50m.
Nagari, added: “Despite the significant and increasing budgets involved we observe that almost all (90%) insurers surveyed feel somewhat or very confident that they will hit the deadline. 2021 is a challenging and critical milestone for the insurance industry but it will mark an important step towards one universal accounting language in improving transparency and comparability.”
In addition to technology spend, insurers are also investing in specialist talent to not only implement new systems, but also encourage greater collaboration between finance, actuarial and other departments.
Andrew Spooner, partner at Deloitte UK, said:
“Insurers are also reporting a labour shortage in the market of individuals with actuarial and accounting expertise. Part of this challenge is that the data required to meet the Standard will need to come from a wide range of areas and be processed in new ways. Ultimately, this will require stronger cultures of collaboration, brought together by individuals who can piece together the aspects of IT, actuarial and finance most impacted by IFRS 17.”
About the survey
This report ‘2021 countdown underway: Insurers prepare for IFRS 17 implementation’ is the third in a series written by the Economist Intelligence Unit on behalf of Deloitte. It tracks the global insurance industry’s progression towards the adoption of IFRS 17. Findings of this latest research are based on the responses of 340 insurance executives from global insurers, located across the UK, US, Canada, Italy, Germany, France, Japan, Switzerland, Spain, China, South Korea, and the Netherlands. Respondents are director or vice-president level and above from a range of insurance companies, including: non-life insurers (29%), reinsurers (20%), composite insurers (18%), life insurers (18%), and health insurers (15%). Net written premiums ranged between €300m to €5bn and above. Respondents were surveyed in February and March 2018.
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