Insurance associations from Australia and New Zealand have joined a global group of insurance bodies in asking for improvements to International Financial Reporting Standard (IFRS) 17-- which covers insurance contracts -- as well as a delay in its implementation.
The group of nine insurance associations has written a joint letter to Mr Hans Hoogervorst, chair of the UK-headquartered International Accounting Standards Board (IASB), that highlights the industry’s concerns about IFRS 17. The IASB has set 1 January 2021 as the mandatory effective date of IFRS 17.
The letter says that extensive testing, together with insurers’ detailed implementation planning, has confirmed that a number of important issues still need to be resolved in order to ensure the quality and operational practicability of the new standard.
There is also industry-wide agreement that a delay of two years is needed, both to allow for the necessary improvements to be made to the standard and for adequate time for companies to tackle the significant implementation challenges that IFRS 17 presents.
The fact that so many insurance associations from around the world have signed the letter demonstrates the importance and urgency to have a decision on a delay and for the IASB to move forward on the necessary improvements, the group says.
The insurance associations say in the letter that they remain committed to a high-quality standard for insurance contracts which improves insurers’ financial reporting.
“We have collectively made significant contributions to the development of IFRS 17 and our member companies are engaging considerable resources into its planning and implementation.
“The industry recognises its responsibility for proposing solutions and we are liaising across our markets with the aim of providing timely progress on the necessary improvements to IFRS 17.”
The letter also said, “There is no expectation that a delay will result in insurers stopping or slowing their implementation project. Rather, it will allow them to deal with operational constraints (skilled resource needs, software solutions), and the systems and control process changes needed to prepare data of suitable quality and reliability. It will also allow for the finalisation of related regulatory changes as required in some jurisdictions, for better change management and user understanding and education on the new, and potentially very different, financial reporting going forward. We ask that these important matters are addressed so that insurers can plan accordingly to ensure an efficient IFRS 17 implementation.”
The insurance bodies that signed the letter are:
- Association for Savings and Investment South Africa
- Canadian Life & Health Insurance Association
- Financial Service Council of New Zealand
- General Insurance Association of Korea
- Insurance Bureau of Canada
- Insurance Council of Australia
- Insurance Council of New Zealand
- Insurance Europe
- Korea Life Insurance Association.