Are you ready for the challenges IFRS 17 will bring?
Insurers currently use a variety of different and largely inconsistent local approaches to measure the value of insurance contracts within their statutory financial statements.
The new IFRS 17 standard for insurance contract accounting has just been released following 20 years of discussion. It’ll be effective for annual periods beginning on or after 1 January 2021. The long lead time is a reflection of the challenges envisaged around implementation.
IFRS 17 is a complex standard that includes some fundamental differences to previous accounting standards with regards both liability measurement and profit recognition. Many large insurers began assessing its potential impact before its release, putting them ahead of the game when it comes to effective planning.
By taking a structured approach to IFRS 17 project planning, you’ll be better able to overcome challenges and maximise opportunities.
A key focus of the continuing debate within Europe over IFRS for insurance contracts is how closely the basis of measurement will correspond to Solvency II.
Alignment between IFRS and Solvency II would open up valuable synergies in data management, modelling and investor relations and enable companies to avoid the expense and disruption of 'digging up the road twice'.
With market scrutiny and competition for capital having sharply increased in the wake of the financial crisis, the planned overhaul of insurance accounting could have a decisive impact on market valuation and investment, while presenting significant implementation challenges.
Insurers are also facing a shake-up in other key areas of financial reporting, including the basis for financial instrument measurement. Read more about important developments in IFRS.