IFRS 17 in Financial Services UK
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Reinsurance continues to be one of the most contentious aspects of the standard for our clients. The key question remains - will the standard setters finally resolve the issues highlighted by reinsurers and direct insurers in terms of the measurement model for reinsurance?
In mid-November, the IASB confirmed its intention to propose a 12-month deferral of IFRS 17 along with a parallel shift of the deferral of IFRS 9 for insurers if those insurers use the option to defer IFRS 9. They recently discussed potential amendments to IFRS 17 ‘Insurance Contracts’ across thirteen topics at their London meeting on 11-13 December 2018. Of these, the Board decided to amend for one topic (balance sheet presentation), deferred one topic (on transition) but agreed not to amend the remaining eleven. A further twelve topics are expected to be discussed in early 2019.
When the Apache attack helicopter was developed it included a monocle for the pilot which gave a heads up display to their right eye featuring a plethora of high level information - keeping an eye on things became a more challenging task when you had to divide your vision to get a holistic view of the battlefield.
Many insurance businesses are struggling with the treatment of reinsurance held under IFRS17. Much of the struggle is to understand the accounting implications, but there are a number of tax issues that businesses should be addressing at the same time. This highlights the importance for businesses of making a place for their tax team within the leadership of the IFRS 17 implementation project.
As someone who has delivered systems changes in finance and actuarial teams for insurance clients for over two decades, I have mixed feeling following the firming up of the IFRS 17 rules and deadlines.