The International Accounting Standards Board (IASB) has today proposed to further delay the effective date of IFRS 17 Insurance Contracts to 1 January 2023.
This represents a one-year delay to the date proposed in the June 2019 exposure draft amendments, and a two-year delay to the effective date set out in May 2017.
The board also proposed that the expiry date of the IFRS 9 temporary exemption for insurance contracts be extended to 1 January 2023 to coincide with the effective date of IFRS 17.
Alex Bertolotti, global IFRS 17 leader at PwC, welcomed the decision to delay again, saying that an extra year would give insurers a chance to consider how they can derive more business value from their IFRS 17 projects.
"For others, it will de-risk the delivery timetable,” he continued. "It recognises the practical difficulties for many insurers in implementing the significant changes brought about by IFRS 17.
“The additional time will also be welcome as insurers consider how they can use IFRS 17 to tell a clearer and more understandable story about their company.”
This comes just weeks after the board proposed a series of minor amendments to IFRS 17 to minimise disruption over the implementation period.
It also follows insurers highlighting unresolved issues with the accounting standard six months ago, with Insurance Europe calling for the effective date to be delayed to 1 January 2023.
Ralph Ovsec, senior director at Willis Towers Watson (WTW), said that today's extensions have addressed a number of concerns raised by the insurance industry.
“We encourage companies to continue to press forward at current pace and use this additional time to strengthen their processes and procedures as well as allow for more testing, dry runs and contingencies.
“We also believe a shared effective implementation date for IFRS 17 and IFRS 9 will avoid temporary earnings mismatches that would otherwise exist and reduce implementation costs.
“The current global environment adds significant resource and time constraints to insurers’ operations, and this additional respite will reduce those near-term pressures on insurers.”
The IASB is expected to issue the final amendments to IFRS 17 around the middle of this year.