The Future Of IFRS 17 & Its Implementation

October 1, 2023by SHMA

IFRS 17 is an International Financial Reporting Standard (IFRS) issued by the International Accounting Standards Board (IASB). It replaces IFRS 4, which was the previous standard for insurance contracts that was in effect since 2004. The purpose of IFRS 17 is to create a more consistent and comparable accounting treatment of insurance contracts across companies, industries and jurisdictions.

In terms of implementation today, IFRS 17 was released in May 2017, with most jurisdictions requiring compliance for accounting periods beginning on or after 1 January 2021. Companies must apply the new standard retrospectively where possible, unless this creates an undue burden.

Additionally, companies must disclose certain information about their insurance contracts in their financial reports to provide stakeholders with greater insight into their business operations.

Looking towards the future, there is still some uncertainty around how IFRS 17 will be implemented and applied in practice. Companies should seek guidance from professional advisors of the actuarial profession to ensure they are compliant with all applicable regulations and standards.

Additionally, IASB has currently developed a project to enhance its implementation guidance by providing additional practical guidance on how to apply the standard effectively. This project was expected to be completed in 2020 and it will help companies better understand their obligations under IFRS 17 and ensure they are able to comply with the standard.

Our Director, Shariq Sikandar found it to be the most demanded actuarial expertise in the market, he says, “IFRS 17 is going to disrupt the actuarial market in the next 10 years due to the lack of technical experts. The demand for actuaries with IFRS 17 expertise has risen and not been met, as of yet.”

The primary aim of IFRS 17 is to improve the reporting of insurance contracts for both insurers and investors. In particular, it provides a uniform approach for measuring and reporting insurance liabilities. It also requires insurers to recognize future cash flows from insurance contracts within a single balance sheet.

These changes will have far-reaching implications for actuarial markets. Insurers will need to adapt their existing processes and systems to comply with new guidelines as required by IFRS 17. Furthermore, actuaries will need to develop new methods of pricing and risk management in order to meet the new requirements.

Additionally, investors will benefit from improved transparency when evaluating insurer performance and risk profiles due to the improved disclosure requirements under IFRS 17. As such, the demand for reliable actuarial services is expected to increase significantly in the coming years.

In summary, it is clear that IFRS 17 implementation will bring about sweeping changes that could potentially reshape actuarial markets in the future.