Financial Services Ireland

INSURANCE ACCOUNTING ALERT

IFRS 17 deferred to 1 January 2023

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At its March 2020 Board meeting, the International Accounting Standards Board (IASB or the Board) completed its planned re-deliberations on the proposed amendments in the Exposure Draft Amendments to IFRS 17 Insurance Contracts (the ED), in line with the plan outlined in its November 2019 meeting. At the meeting, the Board:

  • Agreed to defer the effective date of IFRS 17 Insurance Contracts (IFRS 17) to annual reporting
    periods beginning on or after 1 January 2023
  • Agreed to extend the fixed expiry date of the temporary exemption from applying IFRS 9 Financial Instruments (IFRS 9) for qualifying insurers (as contained in IFRS 4 Insurance Contracts (IFRS 4)), so that all entities must apply IFRS 9 for annual reporting periods beginning on or after 1 January 2023
  • Gave the IASB staff permission to start the balloting process for finalising amendments to IFRS 17

The staff expects the amendments will be issued in the second quarter of 2020.

How we see it

The decision of the Board means preparers are effectively granted one year more to prepare for the initial application of IFRS 17 and IFRS 9, compared to the proposals in the Exposure Draft. Even though the Board decided not to make a change for some fundamental topics (e.g., the annual cohort requirement), there are still a number of changes made during the re-deliberation that will have a significant impact on implementation efforts. Particularly the decisions regarding the recovery of losses by reinsurance held, investment expenses included in fulfilment cash flows, recognition and impairment of assets arising from insurance acquisition cash flows, and the impact of the reporting frequency on the treatment of accounting estimates will require significant evaluation and may cause preparers to rethink some of their IFRS 17 solutions.

Preparers should therefore address the following key tasks in the near future:

  • Reassess overall programme and workstream timeframes, as well as key milestones allowing for the new effective date for IFRS 17 and IFRS 9
  • Update accounting policies and revisit policy choices in response to the revised standard
  • Reassess the current status of system design and configuration requirements in response to the revised
    standard and any changes to accounting policies
  • Align testing and parallel run strategy and planning, as well as building sufficient controls over the process
  • Update and engage key stakeholders (including regulators, analysts, etc.) on next steps and expected impacts

Click below to read our latest Insurance Accounting Alert for further details. If you have any questions, please reach out.

Thought Leaders


Ciara McKenna

Partner

Ciara Fitzpatrick

Director, Insurance






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