IFRS 17 launched today | Deloitte Switzerland has been added to your bookmarks.
IFRS 17 issued on Thursday 18 May – global overhaul of insurance accounting, also relevant for Swiss insurers
Deloitte comments on new international accounting standard for insurance contracts
The International Accounting Standards Board (IASB) has issued its long-awaited standard for insurance contracts after more than 20 years of deliberations. Insurers around the world, including Switzerland, face a "once in a lifetime" accounting change with the introduction of the uniform international accounting standard.
Francesco Nagari, global IFRS insurance leader at Deloitte, said: “Today’s publication of IFRS 17 marks a once in a lifetime change in the accounting requirements for insurance contracts. The new rules aim to bring greater transparency in the financial reporting of an industry whose accounts have often been labelled as a ‘black box’. A single accounting language for insurers should aid comparability across countries where currently various national practices apply.”
“To implement IFRS 17 will take substantial effort. The measurement of the insurance liabilities will reflect market interest rates and the impact of policyholders' guaranteed benefits. The revenue from insurance policies will be reported systematically over the coverage service period. The expected profit from the contracts will be explicitly reported as a component of the insurance liability.”
Emel Can, IFRS insurance expert and Partner at Deloitte in Switzerland added: “Deloitte expects that implementing the new IFRS 17 requirements will entail major changes to the insurance companies’ actuarial and financial reporting processes, systems and data. This effort will likely generate implementation costs for many insurers as large as those incurred in the European Union for the adoption of the Solvency II regulations – estimated between three and four billion Euros for the EU insurers as a whole.”1
“We see this effort to be higher for life insurers than general insurers. The long-term coverage underpinning life insurance policies, together with the more common presence of options and guarantees in life-policies, will require a much more granular set of accounting and actuarial data.”
1 According to European Commission estimates, the one-off net cost of implementing Solvency II for the whole EU insurance industry has been assessed to be around EUR 3 billion to EUR 4 billion.
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