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Transition to IFRS 17 - January 2019

Transition to IFRS 17 - January 2019

Preparing the Market for IFRS 17


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Brian Morrissey

Head of Insurance & Actuarial

KPMG in Ireland


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Proposals aim to reduce accounting mismatches and complexity

Several important proposed amendments to IFRS 17 emerged from the IASB's January Board meeting. The proposals cover four topics:

  • Accounting for reinsurance of onerous insurance contracts
  • Accounting for direct participating contracts when reinsurance contracts held are used to mitigate financial risk
  • Accounting for insurance acquisition cash flows that relate to future contract renewals
  • Allocating the contractual service margin in the general measurement model to investment return services

The proposals would help reduce accounting mismatches and complexity. They also mean that insurers would need to exercise judgement in new areas when applying the standard. Read our web article to find out more.

Proposed Amendment to Insurance Standard

An amendment to the new insurance contracts standard, IFRS 17, has been proposed by the IASB at its December 2018 meeting.

The proposal aims to provide practical relief to insurers by requiring them to present insurance contracts on the balance sheet at the portfolio level – a higher level of aggregation than currently required by IFRS 17.

The Board also discussed 12 other topics at the meeting, but did not propose any amendments in these areas.

Our article further explores this topic, provides background information and next steps.

When opportunity comes calling

5 key commercial & operational opportunities for insurers

A previous KPMG benchmarking study ‘In it to win it’ showed many insurers were facing a struggle against the clock with the original timeline for IFRS 17. Our following article 'When Opportunity Comes Calling' indicates that the additional year brings not only more time — but an opportunity to better understand results and optimize performance on an IFRS 17 basis. The extra time also brings the prospect of delivering greater value from finance, by developing a roadmap to a better financial reporting capability and, as a minimum, containing future costs.

But the change also brings challenges. Some insurers would have liked a longer deferral and the additional year is to enable entities to adapt to further changes to the standard, albeit aimed at reducing its complexity. So it’s crucial that insurers don’t take their foot off the gas, thinking that they will pick up the pace later: that multiplies risks and cost. Instead, the opportunity now presents itself to be more ambitious in those areas where you can derive greater value from change and to better understand results in the new world.

IFRS 17 Webcast Series

We recently held two webcasts on IFRS 17 on Monday 10 December 2018 and Wednesday 12 December 2018. For those of you that joined us live, we hope you found the sessions informative.

For those of you who may have missed the broadcast, please see below for links to the replays.

1. Can you see clearly now? Analysts' views on IFRS 17 and the insurance reporting landscape

Insurers are grappling with the myriad of technical and operational demands of implementing IFRS17, but what of the investors or users of financial information? To shine more light on this, KPMG has captured the thoughts of insurance analysts round the world in a new report, Can you see clearly now? to gauge their views on insurance accounting as it is now and what new insights they expect IFRS 17 to deliver. The webcast summarizes the key findings of the report.

This webcast is approximately 60 minutes.

Click here to access the Webcast Replay.

2. IFRS 17 emerging issues round up

The webcast focuses on the topics discussed at the recent IASB’s Transition Resource Group for IFRS17, grouped by theme covering Separation and Combination of insurance contracts, determining contract boundaries, insurance acquisition cash flows, coverage units and the risk adjustment among other topics.

This webcast is approximately 90 minutes.

Click here to access the Webcast Replay.

Previous KPMG Insurance IFRS 17 series

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