What began as one of the most complex accounting transitions in history has matured into a new financial language that is reshaping boardroom conversations across Malaysia’s insurance and takaful industry.
With the standard effective from 1 January 2023, the industry published its first-ever MFRS 17 financial statements for FY 2023 in Q1 2024, followed by its second cycle for FY 2024 in Q1 2025. As insurers are preparing to close their FY 2025 books, the consensus is clear: transparency has triumphed over early fears of volatility.
From compliance to comprehension
MFRS 17 replaced the patchwork legacy of MFRS 4 with a single, globally comparable framework. Under the new model, insurers recognize profits when services are provided rather than when premiums are received, through a concept known as the Contractual Service Margin (CSM), the unearned profit that unwinds over the contract’s coverage period.
This isn’t just a change in accounting, it’s a change in mindset. MFRS 17 compels insurers to explain their economics more clearly: how value is created, how risk is shared and how profits emerge over time.
Clearer numbers, richer insights
According to EY's 2025 Global IFRS 17 and IFRS 9 Reporting Study, which analyzed disclosures from 50 international insurers, 79% of the FY 2024 net result before tax came from the insurance service result, essentially underwriting performance, while 51% was attributed to the financial result. Almost all insurers reported a positive insurance service result, reaffirming that core underwriting remains the heartbeat of profitability.
Malaysian insurers and takaful operators show a similar pattern. While MFRS 17 has changed the presentation and timing of earnings, it has not altered business fundamentals. Instead, it provides clearer visibility into the real drivers of value.
New Kheng Chee, Group Chief Financial Officer of Syarikat Takaful Malaysia Keluarga Berhad, explained: “MFRS 17 has brought a new level of discipline and transparency to our financial storytelling. It bridges actuarial science, finance and strategy — giving management and investors clearer numbers and deeper insights into the true drivers of long-term value creation.”
The new growth currency
The CSM has become the focal point for analysts assessing sustainability of earnings. EY’s benchmarking found that new-business CSM typically ranges between 5% and 10% of expected premiums, while about 43% of total CSM is expected to unwind over more than 10 years, a sign of long-term profit visibility.
CSM is the new growth currency, which bridges the old embedded-value world with the new IFRS earnings world. Once investors grasp that linkage, they will start to see insurance as a consistent, long-duration asset play again.
Volatility: The cost of transparency
Despite early concerns, most Malaysian insurers and takaful operators reported modest profit growth, up to 10% year-on-year, for FY 2024. Positive experience variances, particularly in health and motor portfolios, helped offset the volatility created by market-based discount rates.
Still, volatility remains. MFRS 17’s use of current, market-consistent discount rates means reported profits can fluctuate more visibly with movements in bond yields and equity markets.
“Volatility under MFRS 17 is not a weakness, it’s a sign of transparency. It mirrors economic reality as it unfolds. The real opportunity is to translate that transparency into actionable insight to strengthen pricing discipline, reserving strategies and the way we communicate performance to regulators and investors,” observed Rina Aprila Afianty, Chief Financial Officer of Berjaya Sompo Insurance Berhad.
Beyond numbers: Operational transformation
Beyond accounting, MFRS 17 has driven digital and operational transformation. Insurers have invested heavily in data granularity, actuarial-finance integration and real-time forecasting. Monthly CSM tracking and OPAT (operating profit after tax) forecasts, once rare, are fast becoming industry norms.
“MFRS 17 has made the case for automation and digitalization stronger than ever. By embedding technology into how we measure, control and report performance, we’re creating a finance function that’s agile, data-driven and ready to support strategic decisions in real time,” said Sharmini Perampalam, Group Chief Financial Officer of MNRB Holdings Berhad.
