Large insurers have stepped up their preparations for IFRS 17 and IFRS 9, but smaller insurers have fallen further behind.
Large insurers have stepped up their preparations for IFRS 17 and IFRS 9, but smaller insurers have fallen further behind in preparing, according to a new report, in it to win it, from KPMG International. Sixty-seven percent of large insurers (with premiums over $10 billion) surveyed are in the design or implementation phase for IFRS 17, with almost as many, 64 percent, in a similar place with respect to IFRS 9.
By comparison, among smaller insurers (with premiums under $1 billion), only 10 and 25 percent have started design or implementation for IFRS 17 and IFRS 9, respectively. However, even with the progress, many insurers have made, major hurdles remain in making IFRS 17 and IFRS 9 operational. Ninety percent of insurers said they foresee difficulties in securing sufficient skilled people to do the job and half are worried about securing the necessary budget.
Bhavesh Gandhi, Partner and Head of Financial Services at KPMG in Kuwait commented on the report findings, and said, “Companies around the world are well underway in their pursuit to implement the necessary changes to comply with the new reporting standards, while the region is still warming up to the impact of this significant accounting change.
IFRS 17 and IFRS 9 can be considered a catalyst for innovation, enabling insurers to take a fresh look at their strategies and financial and actuarial processes. Although implementation cost can be significant, our research demonstrates that opportunities presented can be even greater.”
With the numbers of people required for this complex work, securing sufficient talent is becoming an increasingly acute challenge. Nearly half, 45 percent, of the largest insurers, already have teams of 50 or more and half of the midsize insurers have up to 25 people assigned. Increased training is also a critical need and the majority of insurers have so far delivered training only for members of their implementation teams.
Despite the challenges ahead, virtually all, 97 percent, of the largest insurers surveyed, view implementing the new IFRS standards as an opportunity to transform their business, with a focus on process optimization (identified by 77 percent), actuarial process enhancement (65 percent) and system modernization (58 percent).
New operational challenges will come into focus as preparations advance. Only seven percent of insurers surveyed expect to be ready in time for two years of parallel running; more than half, 56 percent, anticipate just one year of parallel running before going live. Insurers are further along with IFRS 9 implementation, with about three-quarters planning to defer IFRS 9 implementation so it coordinates with IFRS 17.
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