Two years of parallel running are recommended for insurers to get ready for new major new accounting standards, but not many insurance companies appear able to achieve that, according to international professional services firm, KPMG.
Australian insurers lag behind their international counterparts when it comes to being prepared for the IFRS 17 (Insurance Contracts) and IFRS 9 (Financial Instruments) accounting standards, a survey of 160 global Insurance executives by KPMG shows.
The report covers insurers’ preparation for the two major standards which apply to insurers from 1 January 2021 but for which two years of parallel running are recommended.
The survey shows that 7% of insurers expect to be ready in time for this, and more than half expected just one year of parallel running before going live.
“10% of the insurers surveyed were Australian and they do seem to be slightly behind their global counterparts when it comes to commencing and implementing their transition to the requirements of the new standard,” said Mr Scott Guse, KPMG Australia Insurance Partner.
The KPMG survey shows major hurdles remain in making IFRS 17 and IFRS 9 operational, with 90% of insurers foreseeing difficulties in securing sufficient skilled people to do the job and half worry about securing the necessary budget.