BREAKING NEWS: IFRS 17 published

Just like London buses, one set of fundamental changes to insurance rules and regulations seems to be closely followed by a second. Just as the industry has finished implementing Solvency II, it must now prepare for a completely new set of accounting rules, since the International Accounting Standards Board (IASB) has today published International Financial Reporting Standard 17: Insurance Contracts (IFRS17). This will come into force on 1 January 2021.

The parallels with Solvency II are striking: IFRS 17 has been well over a decade in the making and there must have been points when some observers doubted that the standard would ever be finalised.

The move from the current IFRS 4 interim standard to IFRS 17 will fundamentally change financial reporting for insurers. The changes and effort required from insurers to implement the standard are significant and now is the time for insurers to start drilling into the detail of the new requirements, and to make plans to ensure their reporting teams, systems and processes are ready in good time. The implementation of IFRS 17 is likely to be on a scale similar to that just completed for Solvency II.

IFRS 17 will also result in a quite different presentation of insurance company accounts and it will take some time for users to get to grips with the new dynamics of profitability. A key challenge will therefore be appropriate messaging to the market once profits start being reported under the new standard.

After many years stuck on the blocks, the IASB has at long last fired the starting gun. Stay tuned for our commentary on the race itself – it may be eventful and is certainly important!

Contributing Authors: 

Yaryee WongAndrew Scott 

The material and charts included herewith should not be considered a definitive analysis of the subjects covered, nor is it specific to circumstances of any person, scheme or organisation. It is not advice and should not be relied upon. Hymans Robertson LLP accepts no liability for any errors or omissions.