Actuarial Support for Implementation of IFRS 17

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 And IFRS 17 Comparison

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.

International Financial Reporting Standard (IFRS 17)

Why Is IFRS 17 Needed?

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.

IFRS 17 Requirements

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.

Benefits Of IFRS 17

Two of the most significant benefits of IFRS are listed below-

Liabilities valued at market value

With IFRS 17, insurance contracts will be valued in accordance with their assets and other industries, making for a more transparent and better product.

Global consistency

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.

Key Actions For IFRS 17 Implementation

     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.

The Role Of An Actuarial Consultant To IFRS 17 Implementation

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.

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