Implementing IFRS 17 in China
The latest edition of Deloitte's Insurance Accounting Insights – Country in focus has put the spotlight on China to explore the practical implications for insurers in China by focusing on the differences between reporting under PRC GAAP and reporting under IFRS 17.
The Ministry of Finance (MOF) borrowed a number of concepts from the International Accounting Standards Board's (IASB) Insurance Contracts Project when developing the Chinese Regulations on Accounting for Insurance Contracts (“Accounting for Insurance Contracts”) in 2009. Over the last eight years, there have been several developments and as a result, IFRS 17 is expected to bring significant change to financial reporting in the country.
In this paper, we outline several key areas where insurers in China will need to further assess:
- Lower level of aggregation creating greater granularity to produce reported results
- Alignment of life and non-life financial reporting
- Implications of unbundling where no longer permitted
- Risk Adjustment
- Changes in accounting estimates
- Presentation and disclosures
At the end of the report, we have outlined a summary of key differences between reporting under PRC GAAP and reporting under IFRS 17. PRC GAAP embodies the requirements of accounting standards and interpretations issued by China's MOF, industry guidance developed by regulators and industry organisations, as well as common practice developed over time.