Not "business as usual" for industry with IFRS 17 issues still ahead – WTW
Not “business as usual” for industry with IFRS 17 issues still ahead – WTW | Insurance Business Canada
Insurance News
Not “business as usual” for industry with IFRS 17 issues still ahead – WTW
Almost seven in 10 adopted the new standard for the first time in 2023
Insurance News
By
Kenneth Araullo
Insurers have highlighted significant challenges remaining after reporting their half-year 2023 results under IFRS 17 for the first time, according to a global survey by WTW.
The study, polling 235 insurers from 37 markets, includes 160 (68%) reporting for the first time in 2023.
Key insights from IFRS 17 study
The report noted that while there has been material progress, participants state that substantial work is still needed post-implementation. Meanwhile, data, availability of skilled resources, and systems/technology are identified as the primary challenges for IFRS 17 production.
Only 55% of 2023 reporters felt “very confident” in explaining IFRS 17 simple scenario results to senior management or investors. This confidence drops to 18% and 9% when explaining complex and extreme scenarios, respectively, while over half of 2023 reporters are not prepared for business planning/P&L projections based on IFRS 17/9.
Nearly 70% of 2023 reporters expect a longer working-day timetable (WDT), emphasizing the substantial effort required to make IFRS 17 a routine part of reporting and address critical issues. These include shortening the WDT, material system/process improvements, and enhancing analysis and understanding of IFRS 17 results.
Overall, despite the challenges, nearly all 2023 survey participants confirmed that dividend-paying capacity remains unaffected by IFRS 17.
The estimated total cost for the global insurance industry to implement the IFRS 17 accounting standard is now in the range of US$21 billion to US$27 billion, reflecting a significant 15% increase compared to the 2022 assessment. The predicted average cumulative program costs for the largest multinationals are now US$240 million each, and US$30 million each for the remaining insurers.
“With insurers facing hefty costs to implement IFRS 17, future investments need to be strategic and targeted, delivering quick and tangible benefits. Substantial operational efficiencies also need to be found to maximise the benefits of IFRS 17 and move the reporting into business as usual,” WTW global IFRS 17 advisory leader Kamran Foroughi said.
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