IFRS17: Time to act, now
The International Accounting Standards Board (IASB) published IFRS17 Insurance Contracts (the Standard), to be effective for annual periods beginning on or after 1 January 2021, with earlier application permitted. More than 20 years in development, the new financial reporting standard IFRS17 certainly represents the most significant change to insurance accounting requirements in over 20 years with implications not only on the financial disclosures of insurers, but also at operational level across all aspects of the organization. The key objective of IFRS17 presents itself as providing a consistent set of principles across all elements of accounting for insurance contracts.
Responding to stakeholders’ concerns and implementation challenges of IFRS17, the IASB raised the possibility to defer the mandatory effective date to 1st January 2022. Nevertheless, the proposed deferral of one year does not put insurers in a safer position. The implementation of IFRS17 may cause challenges within matters ranging from IT systems and architecture, people management and the financial statement, where the common denominator is a shift in processes requiring comprehensive updates to comply with the new regulation. It is therefore imperative that insurers anticipate these potential hurdles in advance, in order to ensure a smooth and timely transition.
The ongoing regulatory revolution and introduction of IFRS 17 is triggering a technological transformation that will lead insurers towards adopting innovative architectures
Enabling insurers to launch the transformation journey towards becoming a Data-Driven Company, Accenture has identified four possible architectural evolutionary scenarios, from minimum compliance with IFRS17 requirements, to a strategic end-to-end integration solution. Accenture emphasizes a timely start to the implementation process, as it may take between 12-24 months. Once in place, IFRS17 will require insurers to excel in data management, and those who welcome the challenge of the regulation, may lead the race in becoming the Data Driven Company of the future.