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International Financial Reporting Standards

International Financial Reporting Standards

Insurance companies around the world are increasingly subject to International Financial Reporting Standards (IFRS), a comprehensive set of transparent global accounting standards for general-purpose financial statements. IFRS 17 (which replaces IFRS 4) deals with Insurance Contracts and, in conjunction with IFRS 9 that deals with Financial Instruments, will not only fundamentally impact reporting by insurance companies under IFRS, but will also have wide-reaching business implications covering IT, personnel and even product design.

Willis Towers Watson is uniquely placed to help both Life and P&C insurers interpret and implement the new standard developed by the International Accounting Standards Board (IASB). We:

  • Advise more than three-quarters of the world's leading insurers
  • Are the industry's leading risk specialist and a leader in financial modelling
  • Have more actuaries and chartered enterprise risk analysts (CERAs) serving the insurance industry than any other professional services company
  • Are the largest provider of actuarial software in the world.

We combine this specialist knowledge, with unique software tools and unrivalled depth of capabilities to deliver a range of IFRS services, including:

  • Assessing the impact on actuarial and financial processes, IT systems, and data requirements
  • Developing solutions for IT systems requirements
  • Designing, implementing and automating actuarial reporting processes
  • Developing and implementing engagement and training programmes for staff
  • Managing the roll out and testing of the new IT systems and processes.

How we can help you turn IFRS 17 into a success story

  • Execute a pre-study to discover effects on IT-systems

    ASSESSING I.T. SYSTEMS IMPACT, GAPS AND SOLUTIONS


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  • Analyse financial / IFRS P&L and further business implications

    ANALYSING THE BUSINESS IMPACTS OF IFRS 17


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  • Designing of reporting processes, IT-platform and detailed actuarial specifications

    DESIGNING, IMPLEMENTING AND TESTING I.T. AND REPORTING PROCESSES


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  • Employee and Management Training

    DEVELOPING AND DELIVERING EMPLOYEE AND MANAGEMENT TRAINING


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The route to IFRS 17

THE ROUTE TO IFRS 17 (formerly IFRS 4 Phase II)
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After a period of almost 20 years since the then IASC initially approved a project on insurance accounting, on 18 May 2017, the International Accounting Standards Board (IASB) published IFRS 17 Insurance Contracts. The new standard, which will replace IFRS 4 for accounting periods beginning on or after 1 January 2021, is a major milestone for the insurance industry as it represents the first ever near global accounting standard for insurance contracts.

IFRS 17 consists of 132 paragraphs together with a further 777 paragraphs containing Application and Transition Guidance, Illustrative Examples and Basis for Conclusions. The standard sets out a comprehensive methodology applicable to all insurance and reinsurance contracts, both long- and short-term, as well as investment contracts with discretionary participation features.

IFRS 17 represents a major departure from current insurance accounting practices in many jurisdictions which will fundamentally change both how and what insurance companies report to shareholders, policyholders and other stakeholders.

This is more than “just” an accounting change: IFRS 17 will have a wide and significant impact on insurers’ operations and implementation will be a major challenge.

On 14 November 2018, the International Accounting Standards Board (IASB) announced that it had voted to propose a one-year deferral of the mandatory effective date for IFRS 17 to 1 January 2022. The Board also decided to propose extending the temporary exemption for insurers to apply the financial instruments Standard, IFRS 9, to 2022 so that both IFRS 9 and IFRS 17 can be applied at the same time. This proposal is subject to a public consultation, which is expected next year. This deferral comes after nine industry bodies representing insurers in major markets around the world wrote to the IASB earlier in 2018 setting out a case for a two-year delay.

From feedback received from stakeholders, IASB staff have identified 25 areas of concern and the Board has confirmed that it will commence discussions about potential amendments to IFRS 17 at its December 2018 meeting.

This deferral doesn’t mean that Insurers should delay IFRS 17 implementation projects, but rather it will allow preparers to adopt a value-add approach instead of struggling to achieve minimum compliance. Insurers will also now have some capacity to consider business implications earlier and in a more measured way.

Featured Content

IASB issues IFRS 17 Insurance Contracts, starting the countdown to 2021
On 18 May 2017, the International Accounting Standards Board (IASB) published IFRS 17 Insurance Contracts, twenty years after the IASB’s predecessor initiated the insurance contracts project. Learn more.

 

An Insurance Contract IFRS Is Coming: Are Your Financial Models Ready
The new International Financial Reporting Standards changes will impact the primary financial figures of insurers, prescribe new disclosures and affect financial models. Learn more.

 

2015 Life Supplementary Reporting Insights
The 2015 life insurer reporting season showed a continuing emphasis on supplementary information including EV and related metrics, cash flow, economic capital and IFRS profit drivers, although a number of changes were seen as a result of Solvency II coming into force. Learn more.

 

Global Regulatory Insights: Momentum gathers behind global regulatory measures
G-SII and ComFrame requirements have implications for a wide range of insurers’ activities. In this publication, we analyse current challenges and how companies can adapt to regulatory change. Learn more.

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