If you work for an insurance company and you report under IFRS GAAP, you no doubt have seen the decision by the International Accounting Standards Board (IASB) to delay the implementation of IFRS 17 for one year to 1 January 2022.
After you’ve had your celebratory cup of coffee the questions will no doubt start swirling around your office.
“Do we stop the IFRS 17 process and regroup?"
“Do we expand the scope of our planned project?”
“Do we all go home and take a nap?”
The answer is perhaps yes to the nap and a definite no to stopping the process. Even with the delay, many – if not most – insurers will still struggle to finish before the deadline.
Alex Bertolotti, global IFRS 17 leader at PwC stated, “with a one-year delay we don’t expect to see any relaxation of any of the projects. A one-year delay really only just de-risks what are at the moment still quite risky projects because there is so much to do."
We have seen this first-hand in our ongoing IFRS 17 workshops, POCs and implementations with several global insurers. They are addressing challenges like bringing transaction data to a common level of granularity, defining accounting policies and requirements when there are multi-currency transactions within a CSM group and of course, finding suitably qualified resources.
A few years ago, we were working with global Telcos on the revenue recognition standard when the IASB decided on a one-year reprieve. Even with this extra time, many organizations barely made the deadline. Like IFRS 17, the significant systems, data and processes challenges took many longer than expected.
What the delay may do for insurers that have already kicked off projects is give them a chance to take advantage of this unique opportunity to invest, not only in compliance, but in a more holistic, modern accounting approach. Benefits like additional financial reporting capabilities, enhanced management information and business intelligence can help future-proof finance architectures and unlock business insights.
Aptitude has live IFRS 17 projects taking place over 3 continents and we have no expectation that the momentum and pace of progress will slow down with this news. Instead the additional time will enable some insurers to install the robust, automated operational accounting processes that IFRS 17 requires while ensuring the fully digitized financial system used to transform insurers finance functions and the businesses they serve.
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