IFRS 17 – Insurance Contracts
Insurance companies have been waiting nearly two decades for a single global accounting standard that fits their unique and complex industry. The aim of IFRS 17 is to standardise insurance accounting globally to improve comparability and increase transparency, and to provide users of accounts with the information they need to meaningfully understand the insurer’s financial position, performance and risk exposure.
IFRS 17 goes beyond a change in accounting policy. It will impact a Company’s financial performance, operating model and other areas of the business such as product pricing, remuneration policies and financial planning. We have seen it before and have experience in delivering successful large scale regulatory change programmes within Financial Services.
- Deloitte can help you prepare for IFRS 17 implementation
- IFRS 17 Insurance Contracts – Next Steps
- Contact us
Deloitte can help you prepare for IFRS 17 implementation:
- Conduct high level financial and business impact assessments
- Develop impact assessments into project plans and detailed implementation roadmaps
- Provide project management, including expert inputs into planning, budgeting, resourcing, programme structure and programme governance
- Requirements gathering for disclosures, data, systems, processes and capabilities
- Provide insights and observations on available information technology solutions, including vendor benchmarking
- Data sourcing solutions and implementation of the end to end flow of data from source to target
- System build V buy analysis and recommendation
- System implementations / enhancements / add-ons including testing and roll out
- Day 2 readiness - designing building and optimising operating models
- Assist with the design and implementation of process and control changes required as a result of adoption of IFRS 17
- Assist with understanding the key actuarial methodology decisions required and the related impacts
- Provide insights on the KPI’s which will be impacted and assist in developing key messages to be communicated to stakeholders
- Provide advice and recommendations on accounting, actuarial and tax evaluations
- Training and knowledge sharing
IFRS 17 Insurance Contracts – Next Steps
The IASB published IFRS 17 ‘Insurance Contracts’ on 18 May 2017 and the effective date for IFRS 17 is set for 1 January 2021.
- Insurers should prepare for the implementation work that is likely to be long and complex. The decision of the IASB to give up to the year beginning on or after 1 January 2021 to make the new IFRS mandatory is one of the indicators of the expected demands the adoption of this new IFRS will have on the insurance industry.
- Insurers should evaluate whether their current actuarial and accounting systems are flexible enough to be enhanced to address the new data and measurement requirements of the insurance contract standard.
- Another aspect that insurers should consider is whether they have enough staff resources to manage both the transition process and maintain ‘business as usual’ operations.
- Various stakeholders, such as policyholders, analysts, investors, regulators and providers of credit would need to be educated on the implications of the new standard.
In parallel with the adoption of the new IFRS for insurance contracts, insurers would need to ensure they have clear implementation plans on the adoption of the other major IFRS that have been released since 2014 and that are not yet effective:
- IFRS 15 Revenue from Contracts with Customers (effective for periods beginning on or after 1 January 2018)
- IFRS 16 Leases (effective for periods beginning on or after 1 January 2019) and,
- IFRS 9 Financial Instruments which could be effective for periods beginning on or after 1 January 2018 unless an insurer has the option to defer its application to no later than periods beginning on or after 1 January 2021 if it qualifies as having predominantly insurance activities.