How will IFRS 17 impact the actuarial industry post implementation

Francesco Nagari, Deloitte Global IFRS Insurance Leader, gave the first presentation at the webinar, providing insights on how insurers will use IFRS 17 financial reporting in investor relations.

According to Francesco, IFRS 17 is a highly consistent and transparent way of producing financial reports in which CFOs and others will have to become fluent when communicating with investors.

Specifically, he noted, the new standard means insurance is now the only industry globally that must report its expected profit from the main products it sells and handle risk volatility systematically, with an accompanying shift in the focus of reporting from balance sheets to profit and loss. 

In her presentation, Liza Gonzalo, Deloitte China Assurance Director,  assessed the impact on insurers in Asia Pacific of a European Union (EU) exemption from IFRS 17’s annual cohort requirement that mandates contracts within a group be issued no more than one year apart.

She pointed out that APAC entities of an EU parent would need to perform multiple actuarial computations to meet IFRS 17 and local regulatory requirements.

Liza then concluded her presentation by exploring continuing developments in IFRS 17, including agenda decisions, multi-currency groups of insurance contracts, and the treatment of premiums receivable from intermediaries. 

In the third presentation at the webinar, Deloitte China Actuarial Partner Choi Ka Hei looked at the technology and system optimization trends post IFRS 17 implementation.

According to Ka Hei, data processing is a challenge for many insurers due to their immature system infrastructure, and they therefore need sufficient data controls and to follow their data retention and data management policies strictly.

He then explored the specific challenges for multinational insurers, including requirements for a clear and transparent transition strategy and robust management of centralized systems; the implications of IFRS 17 for business planning and forecasting; and working day timetable optimization. 

In the final presentation of the webinar, Deloitte China Actuarial Partner Winnie Sun assessed the main IFRS 17 data challenges for non-life insurers and potential new benefits beyond compliance. 

According to Winnie, data capture, storage, and quality are the most difficult areas for non-life insurers. In the last of these areas, common issues include missing data fields, duplicate value, and inconsistent values.

Concluding with an overview of the potential benefits of IFRS 17, Winnie said potentially easier access to capital markets for M&A and other fundraising was seen as the biggest benefit, followed by improved operational efficiency in insurers’ finance and actuarial functions and financial statements that better reflect business performance.