3 minute read 21 Feb 2019
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How insurers can respond to the IFRS 17 delay

EY Global
By EY Global

Ernst & Young Global Ltd.

3 minute read 21 Feb 2019
Related topics Insurance Financial Services Finance
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A proposed delay to the implementation of IFRS 17 could force insurers to consider the impact and best course of action for their business.

The International Accounting Standards Board (IASB) is proposing a one-year delay to the implementation of IFRS 17 (and IFRS 9) (pdf) and limited changes to its requirements. Insurers are asking what this means for their implementation efforts and how best to respond.

How will IFRS 17 impact your business? 

To understand the impact of IFRS 17, completing an assessment can help solidify the factual understanding of the implications of the delay. Our experience shows that an instinctive view can be misleading. In just a few days, a full assessment can be completed with each of the sub-steps being done in parallel and joining up at the end.

Three key actions to help evaluate the impacts of the IFRS 17 delay: 

  1. Take stock of the current position of your IFRS 17 program
  2. Consider the impacts of possible and proposed changes to the requirements of IFRS 17 and the timing of those changes
  3. Assess the flexibility that any change to the timetable might offer to the program

What are your options? 

Once an impact assessment has been carried out, insurers should consider the broad options at both program and work-stream levels. There are three choices available in response to any delay to a regulatory requirement:

  1. Continue the program within the current timetable (either to completion or to deliver the main key milestones)
  2. Reconfigure or re-time parts of the program (on a piece-by-piece basis) to meet the new timetable 
  3. Slow activity immediately and plan to restart planned activities at a later date

While these options can include any combination of the above, there are tools and techniques that can be used to help make decisions that will preserve momentum, manage the risk of cost increases and help communicate with key stakeholders.

How you can move forward with IFRS 17 

While some insurers have already made a choice to continue, and others are just beginning to assess their options, insurers should follow a structured process to delay:

  • Understand the current progress of implementation, including blockers and risks to progress
  • Evaluate the impact of other in-flight projects
  • Make a more effective assessment of the benefits and drawbacks of the various options available to allow better and more efficient decisions
  • Portfolio and project management tools can be used to support this structured assessment process and to present the summary options to the steering and board committees

What you need to know

As insurers progress with their IFRS 17 implementation, there are some lessons learned from IFRS 9 and Solvency II implementations that should be considered: 

  1. Completely stopping a project and picking it up later significantly increases cost and duplicates effort
  2. To avoid significant post-implementation remediation activities, multiple testing and dry runs will be necessary
  3. Re-planning provides scope to reduce costs and upskill BAU staff through the use of more internal resources on the project
  4. Always leave room for contingency planning of new systems development and installation

How EY can help

IFRS 17 implementation

IFRS 17 is the biggest insurance accounting change in decades. Our skilled team understands both the business and technical issues around IFRS 17 and can work with you to achieve compliance that’s aligned with your finance transformation programs.

Read more

IFRS 17 delay: how insurers can respond

Explore more in our latest thinking. 

Download PDF

Summary

With the proposed delay to IFRS 17, it is important for insurers to understand the impact of the delay and the proposed changes to the standard. Insurers should evaluate their options at work-stream and program levels to help achieve their business goals. 

About this article

EY Global
By EY Global

Ernst & Young Global Ltd.

Related topics Insurance Financial Services Finance
Upvote