General Insurance Article - IFRS 17 Standard clears final hurdle


The International Accounting Standards Board (IASB) has announced that the final insurance contracts standard IFRS 17 (2020) will be released on Thursday 25 June 2020.

 The culmination of almost 23 years of discussion, IFRS 17 will take effect with annual reporting cycles beginning on or after 1 January 2023. IFRS 17 (2020) reflects the results of an in-depth consultation process of the Standard proposed in the Exposure Draft Amendments to IFRS 17, published by the IASB in June 2019 in response to feedback on IFRS 17, as originally issued in 2017.

 In response to those consultations between the IASB, the insurance industry, regulators and accounting bodies, significant changes were made to that Exposure Draft:

 • The extension of the effective date to 1 January 2023 from 1 January 2022 proposed in the Exposure Draft.

 • The ability of insurers to recognise gains on the initial recognition of reinsurance contracts held, which cover onerous underlying contracts.

 • The clarification of the treatment of the contractual service margin (CSM) attributable to investment-return service and investment-related service.

 • The expansion of the risk mitigation option to include reinsurance contracts held where they are used in a manner similar to that of financial instruments.

 Ralph Ovsec, Senior Director, Insurance Consulting and Technology, at Willis Towers Watson, said: “IFRS 17 remains complex. This is partly due to the IASB’s desire to maintain this as a principles-based Standard. There remain areas of significant judgment and many companies continue to face major implementation challenges compounded by COVID-19.”

 The European Union is now expected to resume its endorsement process. A number of concerns expressed by EFRAG (the private entity advising the EU) have been addressed in the final IFRS 17, although some issues are still outstanding.

 Willis Towers Watson recently conducted a global survey of insurers’ IFRS 17 programmes, so far receiving in excess of 230 responses, including 16 members of the European Insurance CFO Forum. Initial findings include:

 77% of the survey participants expect to continue their implementations as originally planned following Covid-19. Nine per cent have been redesigning or pausing parts of their programme.

 • In light of the one-year delay to 2023, 59% want to continue as originally planned. 31% want to do more and 10% intend to pause the programme.

 • Only 10% of the surveyed companies already have a clear view on the business implications of IFRS 17.

 • 55% believe that IFRS 17 earnings / equity will be slightly or much more helpful than current GAAP earnings / equity.

 • 59% believe that the need for additional non-GAAP reporting / supplementary reporting will slightly or significantly increase.

 Ralph Ovsec said: “It is clear from our survey results that IFRS 17 will be challenging to deliver as well as signifying an uncertain future financial reporting landscape.”
  

Back to Index


Similar News to this Story

Canadian billion dollar hailstones
Aon launches the latest edition of its monthly Global Catastrophe Recap report, which evaluates the impact of the natural disaster events that occurre
Global insurance industry to recover strongly from COVID19
The insurance industry is set to overcome this year’s COVID-19-induced global economic recession, the latest Swiss Re Institute’s sigma says. The shar
Increased demand for private medical insurance after COVID19
COVID-19 has put the NHS under tremendous strain, which has created a backlog of cases that will see demand for private medical insurance increase as

Site Search

Exact   Any  

Latest Actuarial Jobs

Actuarial Login

Email
Password
 Jobseeker    Client
Reminder Logon

APA Sponsors

Actuarial Jobs & News Feeds

Jobs RSS News RSS

WikiActuary

Be the first to contribute to our definitive actuarial reference forum. Built by actuaries for actuaries.