Asia-Pacific IFRS 17 - Welcome
With the issuance of the new accounting standard for insurance contracts (IFRS 17), the IASB closes a long and eventful journey to define the basic objectives, accounting principles and reporting guidelines for this new standard. When in 1997, the Board’s predecessor, the IASC, first set up a steering committee to carry out initial work on what was then called the “Insurance project”, nobody expected that it would take 20 years to publish the final result.
We now have a commonly agreed foundation for accounting and reporting of revenues, profits and liability positions for insurance companies. From what we have heard from our clients, and from what we are seeing in the insurance industry, the new IFRS 17 standard is much more than a complex accounting change.
This standard triggers fundamental changes in the way in which insurance companies will generate and report on their financials, both internally and externally. It also requires a new dimension of data granularity, to be accommodated by already stretched IT infrastructures that legacy applications used by most insurers will struggle to deliver.
Last but not least, it introduces a new language for measuring and reporting financial performance that we will all need to get used to, from the preparers and the investors, to the auditors and regulators.
At EY, we do not see this change as yet another expensive cost-intensive regulatory requirement to fulfill - we see the implementation of the new standard as a possible catalyst for necessary operational change in the finance and risk functions of insurers. This will be an opportunity for insurers to improve efficiency and reduce complexity in the long run. By harmonizing risk and regulatory reporting with the new insurance and accounting operations, driving better alignment between the Finance and Risk / Actuary departments, upgrading outdated system landscapes, streamlining current reporting processes and better designing embedded integrated KPI metrics and dashboards, you can achieve much more than just compliance with the new accounting standard. You can use this opportunity to define and redesign the foundation for your future financial reporting landscape for the next decade.
We are keen at EY, to shape this new future and help you to define a smart and beneficial implementation, without being too restrictive in the interpretation of the new regulations. 20 years of discussions are behind us, let’s now move on to smart action!