Among the new and updated requirements in the revised version of IFRS 17 Insurance Contracts is the new effective date of 1 January 2023. For many, there is still a lot of work to do.
Implementing a major new standard inevitably presents challenges. For insurers, there is the substantial effort of installing and testing new or upgraded systems, processes and controls, and coordinating between functions such as finance, actuarial and information technology. For investors and other users of the financial statements, there is the need to understand what is going to change and how it will change.
But there are also opportunities. A change of this magnitude is a chance to develop a fresh perspective – to gain new insights from data and how it’s reported and for insurers to enhance the efficiency of their processes.
IFRS 17 brings new levels of transparency, giving users more insight into an insurer’s financial health than ever before. Investors will be able to draw on more information on the profitability of new and in-force business: the separate presentation of underwriting and financial results will provide added transparency about sources of profits and quality of earnings. The new standard will drive greater consistency globally, allowing for increased comparability between insurers.
With IFRS 17, the temporary exemption from IFRS 9 Financial Instruments will soon expire for insurers. The implementation of IFRS 9 will allow insurers’ investment activities to be compared with other entities’ once again.
This First Impressions: 2020 edition provides an overview of the revised standard and how it may affect insurers’ financial statements. The indicates areas that have been amended in the revised version of IFRS 17.
We hope it will help you to meet the challenges of implementing this complex standard, and to understand where some potential opportunities might lie to ensure that you and your business will be well prepared for 2023.