colorful houses over water in trondheim city norway

What insurers have learned to date from the implementation of IFRS 17

What are the major findings of implementation projects to date that company executives, audit committee members and investors need to know?

In brief

  • IFRS 17 is expected to have a significant impact on the numbers reported as well as the new information contained in disclosures.
  • Insurers that implement IFRS 9 at the same time as IFRS 17 face two major accounting changes that bring far reaching consequences for their financial reporting.
  • Insurance company executives need to act now, with their whole organization engaged, to reap the benefits of successful implementation of the new standard.

In less than a year, IFRS 17 Insurance Contracts will replace IFRS 4 Insurance Contracts and fundamentally change the accounting for insurance contracts. IFRS 17 is the first comprehensive global accounting standard for insurance contracts; it aims to make the financial statements of insurers more relevant, comparable and transparent. In preparation for the change to IFRS 17, many insurers have learned important lessons that could prove valuable to others who are yet to complete their implementation projects.

What are the major findings from implementation projects to date?

The implementation of IFRS 17 can have a pervasive impact across the architecture and requirements of the IT systems and the finance function. This includes processes from insurance policy administration systems to actuarial models, to the general ledger and consolidation process. Many insurance companies have invested in major transformations to integrate business, finance and IT systems. 

A key question that insurers need to answer is “How will IFRS 17 change the numbers reported in the financial statements for my organization, and how will this change be communicated to investors?” For many insurers, IFRS 17 is expected to have a significant impact. Even if the reported numbers do not change significantly, IFRS 17 requires so much new information and, in particular, new disclosures, that the effort involved in its successful implementation should not be underestimated.

Many insurers will implement IFRS 9 Financial Instruments at the same time as applying IFRS 17. Those insurers are now dealing with two major accounting changes that should be considered together, given the interaction between the insurance liabilities and the investments that are backing them.

Do stakeholders believe the objectives of IFRS 17 are being met?

IFRS 17 was issued by the International Accounting Standards Board (IASB) with the objective of creating a single global insurance accounting standard that would increase the transparency of insurers’ financial positions and performance and make their financial statements more comparable with both other insurers and other industries. Currently, insurance companies apply a variety of “grandfathered” practices from national accounting standards, which allows for very little comparability. Many insurers are currently considering the extent to which the objective of increased transparency will be met given the complexity of the new standard, which has also given rise to concerns about the costs involved in its implementation. This has to be seen against the backdrop of a long project history - it has taken over 20 years to develop the standard, and there have been a lot of global changes during that time. In addition, the IASB was faced with a giant task in developing a single model for insurance products that differ fundamentally across jurisdictions, with existing accounting practices having been driven by the regulatory context.

In terms of transparency, many stakeholders believe that IFRS 17 will make a difference because insurers will consistently use current estimates, ensuring their insurance liabilities and the resulting new disclosures required will provide more insight into the way that they generate profits, and the composition of their assets and liabilities. However, it will take several years before the benefits can be fully observed as comparability increases over time when market practices converge and the effect of specific transition reliefs gradually reduces. IFRS 17 should also move insurers closer to other industries in terms of the comparability of their financial statements. 

IFRS 17 is a complex standard, and its implementation will be felt most in the IT and finance functions. Insurance companies may need to be ready to adapt their systems and processes to manage uncertainty about some of the requirements of IFRS 17.

What is the impact on the financial statements and KPIs?

We recently conducted a global survey of insurers, IFRS 17 and investor stories: five key actions for insurerswhich explores the impact on their KPIs and investor reporting under IFRS 17.

The overall response was that companies are still working on their “investor story”. IFRS 17 will require new metrics — for example, the future profit expected to be earned from current contracts. Life insurance companies focus on operating profit or regulatory capital as an Alternative Performance Measure (APM, or non-Generally Accepted Accounting Principles (GAAP) measure). There is a view that such APMs will still be important under IFRS 17 as companies look to eliminate short-term fluctuations in the results and provide information about their ability to pay future dividends. In the non-life insurance industry, there are well-established KPIs, such as ratios for claims and expenses, which are commonly used across the market. The challenge under IFRS 17 is how those ratios are calculated and whether they remain relevant because of the changes to the accounting caused by IFRS 17. Some of those ratios will need to be redefined under IFRS 17, and some insurers may continue to report ratios on a pre-IFRS 17 basis in the short to medium term.

The changes that come with IFRS 17 will affect both insurers and investors. It provides new metrics and disclosures that aim to increase the transparency of insurers’ financial position and performance. As insurers are still working on their numbers and their investor story, it is key that the new numbers become more stable as quickly as possible. 

What are the lessons learnt so far from implementation?

In most cases, the biggest lesson is that organizations will not know how IFRS 17 will work until the first time that they produce the numbers. Those insurers that have done dry runs have been very surprised that the numbers produced do not always make sense. Some of the larger life insurance companies have found that it is only when they get to the third dry run that they start to understand the numbers being produced. It is critical to make sure that the IFRS 17 numbers are stabilized as soon as possible. Companies may find this challenging because the implementation has taken longer than planned, but further delay may cause more issues later.

A second key lesson is to consider that the numbers will need to be audited, and this will take additional time and resources. A consensus appears to be emerging that in Q3 or Q4 of 2022, companies will start releasing information to the market about the expected impact on the effective date (1 January 2023), followed by information on opening balance sheets and comparative numbers under IFRS 17 in Q1 2023. Companies need to focus on ensuring there is enough time to produce and understand this information and for the numbers to be audited before publication.

Other factors to consider include allowing sufficient contingency time in the implementation process if things go wrong. As the implementation date draws closer, some companies are finding that the first reported numbers may need to be produced using workaround solutions, and that additional time after implementation needs to be factored in to improve and automate the production process. This is something that was seen with IFRS 9 implementations in other industries in 2018. Companies are also finding that often, it is not possible to buy a single vendor solution that will facilitate the application of IFRS 17. This consequently impacts the entire system’s architecture, including the consolidation system, the policy administration system and actuarial models.

There is still some uncertainty about the requirements of IFRS 17 and how they should be implemented; some areas are still open to interpretation. The standard was issued in 2017, but then amended in 2020 as a result of the issues that were encountered in implementation. Companies need to be ready to change something that may have already been implemented in their systems and processes as interpretations and practices evolve.

What have regulators said so far?

Globally, the extent to which regulators are involved in IFRS 17 varies widely. Some jurisdictions, particularly in Asia-Pacific and Canada, will have regulatory reporting based on IFRS 17, and in those cases, the regulators have been very active. For example, in Korea, the regulator requires insurers to be ready to report IFRS 17 numbers even before the effective date of the standard. This has driven insurers in that market to be well advanced in their implementation. By contrast, in Europe, regulatory capital is governed by different rules from IFRS 17. In some countries, such as those in the European Union (EU) and the United Kingdom (UK), the standard requires endorsement before companies can apply it in their financial statements, which may result in some differences compared to IFRS 17 as issued by the IASB (which already proves to be the case for the EU).

Regulators are very keen to have consistent, high-quality implementation of the standard and high-quality audits. They would like companies to follow the same approach to standardize implementation around the world. Some regulators may consider prescribing that the standard is implemented in a particular way, for example, limiting the options available in IFRS 17 within their jurisdiction.

What are audit committees focusing on?

Audit committees will need to ensure they are comfortable with the numbers when the IFRS 17 financial statements are issued for the first time. Audit committees should be comfortable with the implementation plans, management’s progress with the plans and the accounting judgments made. Companies may not have a lot of time to understand and explain the numbers and audit committees may not have previous experience to be able to compare them. There are likely to be a lot of manual processes and controls around the first set of financial statements, which could create a greater risk for audit committees. 

Between now and implementation, insurers need to disclose the main impacts of transition, describing the accounting polices applied currently compared to those that will be applied in 2023 and how the 2023 financial statements will look. Audit committees need comfort in the implementation plans and judgements made to date.

What should insurance companies be disclosing between now and the 2023 implementation date?


Companies are considering questions such as, when should they disclose information to the market, what should be in investor communications versus the financial statements and what does IAS 8 Accounting Policies, Changes in Accounting Estimates and Errors require companies to include in the financial statements? The more complex the implementation, the later companies are tending to plan to make disclosures to the market. By the implementation date of January 2023, companies should know the main impacts, and therefore, would need to disclose them when they publish their 2022 annual financial statements. Insurance companies will also need to consider how to communicate the transition from their existing accounting policies, applied in 2022, to IFRS 17 from January 2023.


One area that may need further consideration is the interim reporting for 2023. Those companies further ahead in the implementation process have started producing pro-forma annual financial statements to understand what the financial statements will look like. However, many companies have not yet considered the interim financial statements that will be prepared in accordance with IAS 34 Interim Financial Reporting. Given that the 2023 interim financial statements will be the first financial statements issued under IFRS 17, companies should start to consider this.


What should insurance companies focus on in the months leading to the implementation date?


The key objective is to keep the implementation project moving as the deadline approaches and actual transition numbers need to be produced. Companies should, therefore, ensure that the whole business stays involved in the project. All companies, even those that started early, are still finding difficulties, and therefore, they need to keep momentum and focus on the project through to implementation. Planning early and securing resources will be important as a significant resource crunch is expected over the next 12–18 months.


The IASB’s new standard for insurance contracts has an effective date of 1 January 2023. It represents a complete overhaul of the accounting for insurance contracts in recognition of the need for greater transparency of insurers’ financial positions and performance. Improved information in the new disclosures will allow for greater comparability of their financial statements with other insurers. Insurers will need to help analysts and other users of their financial statements to interpret the new information and understand how it relates to what they receive currently.

About this article


Related articles