PwC comments on the new International Financial Reporting Standard
The new International Financial Reporting Standard (IFRS) issued by the International Accounting Standards Board (IASB) is expected to bring significant changes to the insurance industry.
Alex Bertolotti, Global IFRS insurance leader at PwC, comments: “IFRS 17 is the biggest shake up of insurance reporting for decades, impacting all insurers reporting under IFRS and even some other organisations writing insurance contracts such as banks with equity release contracts. The IASB’s aim is to provide more transparency and comparability than the current accounting standards. It is, however, complex and the detail of the standard together with the forthcoming guidance over implementation will play a significant role in the ease or otherwise of adoption of the standard.
“One thing is clear, particularly for life insurers – whilst ultimate profits will not change, the emergence of those profits can change significantly. Both insurers and their analysts will need to assess the full impact in terms of telling the performance story of their companies. Key performance indicators and income statements will look significantly different following implementation. There are things firms should be doing now to understand and communicate the impact of different assumptions and approaches, as well as to assess the scale of work and resources required.
“Systems and processes will likely change significantly to accommodate the granularity of data needed to comply. We have already noticed a trend of companies taking the opportunity to revamp and update legacy systems, as part of wider transformation projects, to get a bigger return for their investment.”
Androulla S Pittas, Partner, In charge of insurance at PwC Cyprus comments: “We have been waiting for the new standard for some time now. It is important for the insurance companies to assess the impact on their financial statements well in advance so as to avoid surprises.”