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The Actuary The magazine of the Institute & Faculty of Actuaries

Insurers call for delay to IFRS 17

Nine insurance organisations have written to the International Accounting Standards Board (IASB) calling for a two-year delay to the introduction of IFRS 17.

Companies urge for longer preparation time ©iStock
Companies ask for longer preparation time ©iStock

In a letter addressed to the IASB’s chairman Hans Hoogervorst, the group warned of “serious operational constraints” on insurers’ ability to meet the 1 January 2021 implementation date.

The organisations also highlighted a range of concerns they have with the standard, including measurements of discount rates, and called for improvements before IFRS 17 comes into force.

“We are liaising across our markets with the aim of providing timely progress on the necessary improvements,” the letter states. “As a result, we strongly believe a two-year delay is required. 

“This is essential to allow for the necessary improvements to the standard and to allow adequate time for companies to apply the standard and meet its significant implementation challenges.”

The Insurance Bureau of Canada, the Financial Service Council of New Zealand, the Association for Savings and Investment South Africa and Insurance Europe, are among the nine signatories.

There is no expectation that a delay to the implementation date would result in insurers stopping or slowing their IFRS 17 preparations, according to the letter.

Instead, it is thought that the extra time will help firms deal with challenges around software solutions, acquiring skilled workers, and the system changes needed to prepare data of suitable quality and reliability.

In addition, the group said this would allow for regulatory changes to be finalised in some jurisdictions, and for better understanding of “potentially very different” financial reporting going forward.

Insurance Europe said: “A number of important issues still need to be resolved in order to ensure the quality and operational practicability of the new standard.

“The fact that so many insurance associations from around the world have signed this letter demonstrates the importance and urgency to have a decision on a delay and for the IASB to move forward on the necessary improvements.” 

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