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Understanding IFRS 17 : Are you ready for what is to come?

 


The new IFRS standard for Insurance contracts, IFRS 17, will come into effect for annual reporting periods from 1 January 2021, replacing IFRS 4. 

The standard aims to address current inconsistencies in accounting treatments across different insurers and enhance the comparability of financial reporting among entities, jurisdictions and capital markets. This will improve the relevance and transparency of financial reports and address areas in the current regulations where up to date information and the risks associated with insurance contracts are not fully taken in to account.  

These measures will help to reflect a complete view of the effect of insurance contracts on a company’s financial position.


IFRS 17 will affect all current IFRS reporters (excluding those in the US) and will have a large impact on many areas within companies. The new regulations will see changes to the liability measure and profit recognition of insurance contracts as well as a likely need for changes to companies’ modelling systems and data storage requirements.

The increased disclosure requirements and the interactions and dependencies between the Finance, Actuarial and Risk teams will likely mean a review of resources and efficiencies across the departments.


IFRS 17 will certainly have a significant impact on actuarial models, challenging them even more following their recent Solvency II related transformations. Models will need to handle volumes and granularity of assumptions and calculations which are not common practice for most reporting functions.

Many of the existing tools in place may no longer be efficient enough to deal with these requirements and many actuaries are grappling with the challenge of getting their models to do so much more, while keeping runtime and processes reasonable.

MBE is equipped to work with clients at every step of their IFRS 17 implementation process.  Please browse the selection of resources and insights on our website, or contact us to discuss any IFRS 17-related queries in person.


 

“Regulatory reforms have the ability to greatly enhance the risk management
framework of an insurer.  We aim to help clients prepare for IFRS 17 in a way
that adds value far beyond compliance.”

Andries Beukes, MBE Director