The IFRS 17 transition challenge

When is the deadline for insurers and reinsurers to apply IFRS 17?

1 January 2023

1 April 2022

1 January 2022

1 April 2023

What will be the most radical change to internal operations?

Incorporating the contractual service margin calculation engine

Use of a new software package

Deciding in which order to perform calculations

The process of selecting a new compliant accounting package

Which of the following is not an area of non-consensus on IFRS 17 between accounting and audit experts?

The applicability of foreign currency to the contractual service margin (CSM)

The order in which calculations are to be performed

The software package to be used

The categorisation of risks as financial or non-financial

Why is it not easy to answer the question 'what is the expected result that includes the CSM and its behaviour?'

Because the standard brings a whole new concept to insurance calculations

Because auditors and actuaries do not typically work well together

Because there are so many test scenarios to cover

Because early attempts at calculating the results have not gone well

What have the most advanced insurers been doing to prepare for IFRS 17?

Asking one of the Big Four to configure a CSM engine and accounting sub-ledger from Excel and help run tests

Allocating more budget to invest in test cases

Running their own low-volume use cases as a test

Employing one of the Big Four to run the first year of their transition project

Under what misconception may property and casualty insurers have been labouring?

That if they have no contractual service margin then they have no problem

That they will be able to use their old software to make calculations under IFRS 17

That the IASB will give them more time to transition to the new system

That the standard does not apply to them

Where might the biggest impact of IFRS 17 be found?

In the day-to-day working lives of internal accounting

In the. Profit margin because of the size of investment required to apply IFRS 17

The level of contract aggregation

In the CSM

What does aggregation require?

Division of the business into portfolios

Division of the business into portfolio books with no more than a 12-month span

Division of the business into portfolios and annual cohorts

Division of the business into annual cohorts

What does aggregation imply?

That loss components will likely need to be recognised and a hit to the income statement taken immediately

That insurers will make less money than they used to

That companies will need to find new ways to build cohorts and portfolios that spreads risk differently

That open-ended portfolios are no longer really open-ended

Which type of insurer might find the assessment and re-measurement process most onerous?

Property and casualty insurers

Health and life insurers

Retail household and automobile insurers

Medical malpractice insurers

The IFRS 17 transition challenge

When is the deadline for insurers and reinsurers to apply IFRS 17?

What will be the most radical change to internal operations?

Which of the following is not an area of non-consensus on IFRS 17 between accounting and audit experts?

Why is it not easy to answer the question 'what is the expected result that includes the CSM and its behaviour?'

What have the most advanced insurers been doing to prepare for IFRS 17?

Under what misconception may property and casualty insurers have been labouring?

Where might the biggest impact of IFRS 17 be found?

What does aggregation require?

What does aggregation imply?

Which type of insurer might find the assessment and re-measurement process most onerous?

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