The International Accounting Standards Board (IASB) has published amendments to IFRS 17 to help companies implement the standard and more easily explain their financial performance.
The amendments to an exposure draft published last year include deferring the effective date of IFRS 17 by one year to 1 January 2023, allowing companies worldwide to adopt the standard at the same time.
Insurers will also be able to recognise gains on the initial recognition of reinsurance contracts held which cover onerous underlying contracts, while the risk mitigation option has been expanded to include reinsurance.
This comes after almost 23 years of discussion, as well as in-depth consultations between the IASB, the insurance industry, regulators and accounting bodies.
“We welcome the practical benefits that these amendments provide in easing insurers’ implementation of the significant changes brought about by IFRS 17,” commented Alex Bertolotti, global IFRS 17 leader at PwC.
“Insurers can now focus their efforts on refining their implementation projects and deciding how they will use IFRS 17 to tell a clearer and more understandable story about their business.”
The IASB has also issued an amendment to IFRS 4 so that eligible insurers can still apply IFRS 9 alongside IFRS 17.
This comes after Willis Towers Watson (WTW) recently conducted a global survey of insurers’ IFRS 17 programmes, finding that only 10% have a clear view on the business implications of IFRS 17.
In light of the one-year delay to 2023, 59% want to continue as originally planned, 31% want to do more and 10% intend to pause the programme.
Ralph Ovsec, senior director of insurance consulting and technology at WTW, said: “It is clear from our survey results that IFRS 17 will be challenging to deliver as well as signifying an uncertain future financial reporting landscape.”
Author: Chris Seekings
Image credit: iStock
