With the 1st January 2023 effective date for IFRS17 fast approaching, we understand how hectic IFRS17 teams will be as they work towards finalising their implementation programmes.
Whilst companies have projects well under way, we are finding that they are facing challenges as they reach the final stage of their IFRS17 implementations and perform final calibration of models and address the specific details relating to their products, data, accounting systems and reporting processes.
These challenges are not unexpected and arise as a result of:
- The complexity of the requirements. IFRS17 is often regarded as one of the most complex accounting Standards, which is applied to Insurance contracts at a very granular level. This combination of complexity and granularity is proving a significant challenge.
- Making accounting policy choices and areas of key judgment. IFRS17 allows insurers a number of accounting policy choices, which means that similar firms can adopt a different approach to IFRS17 implementation. Therefore it is important that firms understand the choices available to them and that they can select the optimal outcome for them (for example using the Modified Retrospective Approach or the Fair Value Approach, when the Full Retrospective approach is not possible). In additional there are numerous key areas of judgement such as the level of aggregation, the assumptions used to estimate future cashflows and assessment of the required measurement model.
- Securing skilled resource to implement the programme in the remaining time available. With limited time remaining to implement IFRS17 there will be an inevitable scramble for skilled resource.
As firms complete the technical implementation of IFRS17, the focus of effort will transition to embedding of the process and optimisation and streamlining of the reporting process. In addition, there are considerations around product development, business planning and other wider considerations as to how to embed IFRS17 within the organisations.
For some firms, this will commence prior to 1st Jan 2023, while for others this will only become a priority after the effective date for IFRS17. Therefore, planning ahead for post implementation is also important, as resources are likely to be in demand in this phase.
At Zenith, we have a team of actuaries with deep technical and practical knowledge of IFRS17. We have been supporting clients through various stages of their implementation projects, including analysis of the requirements, development of models, analysis of results and communication of key messages to stakeholders.
As firms prepare their transitional balance sheets, there are many issues that are likely to need addressing. We can help firms reach the timescales by providing our experienced input into aspects such as:
- Refinement of methodology
- Testing of the end-to-end process
- Analysis and understanding of results
- Review and challenge of the key judgments and the accounting policy choices
- Transitioning to BAU and stakeholder engagement
Please contact us for more information on how we can support you.