The International Accounting Standards Board issued IFRS 17 Insurance Contracts in May 2017. Every insurance company reporting under IFRS will be impacted by the new reporting standard when it becomes effective in January 2021. More than 20 years in development, the new standard replaces IFRS 4 on accounting for insurance contracts and represents a complete overhaul of accounting for insurance contracts.
The new standard will increase the transparency of insurers’ financial positions and performance, and is intended to make their financial statements more comparable with both other insurers and other industries.
IFRS 17 is a complex standard. It covers accounting for a wide range of contracts that insurers issue globally. The degree of change compared to existing practice will vary based on existing accounting policies and the types of business insurers write. However, the change will be significant for nearly all insurers. This is why the IASB has allowed more than three years after issue date for the standard to become effective.
The change will affect both preparers of financial statements and users. Users of financial statements will receive more and different information about an entity’s insurance contracts in the IFRS financial statements than in the past, which may change the way they assess and compare insurers. Preparers will need to help analysts and other users of their financial statements to interpret the new information and understand how it relates to what they receive currently. Analysts may wish to evaluate an insurer’s performance on the new basis (albeit estimated), even for comparative periods, before the standard is effective.
Regardless of what stage of readiness your business is at, we can help you to successfully implement the new standard.
Our insurance practice has a track record in supporting IFRS conversion and accounting change/implementation projects. Our teams understand both the opportunities and challenges these changes can bring, and provide access to a well-established global US GAAP and IFRS knowledge network. We can use accelerators that we have developed to assist you in reducing implementation or convergence cost, retaining clients and supporting business growth through first class service delivery.