IFRS 17, or International Financial Reporting Standard 17, was meant to be implemented in 2021 but postponed to 2023. It is the most essential accounting revolution in the insurance industry that will support the collaboration of actuaries and accountants to create standards for the next generation. In this article, you will learn everything about IFRS 17 and the role of an actuarial consultant in its implementation. Actuarial consultants possess a thorough knowledge of finance and can give you the best suggestions and advice on insurance, investment, and pension-related decisions.
IFRS 4 allowed insurance companies to work using national standards, which wasn’t a suitable option for investors as it reduced comparability. IFRS 17 ensures consistent accounting across all IFRS jurisdictions regardless of the product used in insurance contracts.
IFRS17 provides consistency in all aspects of insurance contract accounting. By eliminating existing inconsistencies, it facilitates meaningful comparisons of companies, industries, and contracts. IFRS 17 increases transparency by making it easier to compare financial information internationally and ensure information quality. Consequently, investors and other stakeholders can make informed economic decisions.
Under IFRS 17, insurance contracts need to be measured using updated estimates that reflect cash flow timing and any uncertainty that may exist. As a result, companies will be able to report their financial position and risks transparently.
Two of the most significant benefits of IFRS are listed below-
With IFRS 17, insurance contracts will be valued in accordance with their assets and other industries, making for a more transparent and better product.
It must be a good thing to have an accounting standard that applies consistently to all insurance contracts, right? The system will reduce compliance costs, particularly for multinational insurers, as well as make comparing results and financial statements easier.
● Understand the requirements of IFRS 17
● Perform gap analysis
● Conduct training sessions for the core team
● Conduct briefings on technology and business
● Consult with regulators and external auditors on findings
● Perform impact assessments for data, architecture, and systems
● Engage key stakeholders and mobilize project resources.
● Describe the findings and the approach to implementation to the Board and key stakeholders
● Prepare a roadmap for IFRS 17 implementation and a budget.
An actuarial consultant plays a vital role in the implementation of IFRS 17. Read on to know more about it-
● Improve the accounting system by making changes to the methodology, assumptions, reinsurance treatment, and required output.
● Improve IFRS 17 actuarial processes, including valuation, pricing, profitability testing, and management reporting, including embedded values.Ensure that the internal risk management team uses IFRS 17 compliance checks developed by the actuarial department.