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.
Published: 18 July 2018
More than one in three (35%) global insurers are budgeting over €50m (approximately RMB400m) 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.
"The fact that Chinese insurers have earmarked more of their budgets to build internal capabilities and obtain support from external consulting firms might explain why most of them are confident about their readiness for IFRS17 implementation. Based on the survey findings, it appears the major challenges to IFRS 17 compliance include performance issues with technology solutions, difficulties in capturing data inputs, and calculation capabilities pressured by higher data volume and complexity" said Eric Lu, IFRS insurance leader at Deloitte China.
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.