International Accounting Standards Board (Board) member Amaro Gomes outlines the materials and other support available to national standard-setters and regulators planning for implementation of IFRS 17 Insurance Contracts.
In 2021, companies will apply the accounting requirements in IFRS 17. The Standard will be a fundamental change for the insurance industry. For many companies, the challenge will be as big as adopting IFRS Standards for the first time.
Jurisdictions have their own processes for adopting a new IFRS Standard, varying from automatic adoption to extended consultation and endorsement. Regardless of the adoption process, the national standard-setter or regulator can play a crucial role in successful implementation of a new IFRS Standard.
This article outlines steps national standard-setters or regulators may take when planning for implementation of IFRS 17 in their jurisdiction alongside the materials and other support available from the IFRS Foundation.
Set the scene
A useful first step is to create a consensus of the need for and objectives of IFRS 17. This can help everyone commit to an implementation plan.
The following materials may be useful:
To understand and explain why IFRS 17 was developed, see
- the article, 'Why change insurance contracts accounting?', to understand why the Board and many others thought insurance contract accounting urgently needed change; and
- our Feedback Statement for an overview of the consultation process and feedback on the Standard.
To familiarise stakeholders with the scope, timing and requirements of IFRS 17, see
- Board Chairman Hans Hoogervorst’s introduction to IFRS 17 in this short Debrief;
- our Project Summary for an introduction to IFRS 17; and
- our Fact Sheet for answers to many of the questions on IFRS 17.
To understand and explain the possible benefits and costs of IFRS 17, see
- the Effects Analysis to understand the benefits and costs of IFRS 17 as well as the potential impacts for both preparers and users of financial statements.
To understand and explain how IFRS 17 relates to prudential regulation, see
- the Effects Analysis, which includes discussions on how IFRS 17 relates to regulatory frameworks and how the objectives of many regulatory frameworks differ from the objectives of financial reporting; and
- the IFRS Standards and financial stability presentation including discussion of how IFRS 17 contributes to financial stability, and the relationship between the IFRS Foundation and regulators.
To understand and explain what investors think about IFRS 17, see
- the article, 'What investors ask about IFRS 17,' for the top five questions investors ask.
Plan for implementation
Deciding who is responsible and having a robust plan is key to the success of any project. Implementing a new IFRS Standard is usually resource intensive and getting all the right people involved—preparers, auditors and regulators—is essential. For a Standard like IFRS 17, technical specialists such as actuaries and financial-risk analysts will also be involved.
Discussion Groups for Implementation
Many jurisdictions establish groups to plan implementation of a new IFRS Standard, such as the discussion groups on IFRS Standards set up by the Canadian Accounting Standards Board and the transition resource group for insurance contracts established by the Australian Accounting Standards Board. These groups provide a forum for discussion of issues arising on implementation of a Standard such as the impact of local initiatives, including regulation, and to share experiences. These groups may also submit questions to the IFRS Interpretations Committee or the Transition Resource Group for Insurance Contracts.
Another job for implementation groups is educating others. Most implementation plans have an educational stage to help stakeholders understand the details of IFRS 17.
A number of webcasts with introductions to specific requirements of IFRS 17 are available on the IFRS Foundation website. Each webcast lasts 15 to 30 minutes and covers a topic such as the scope of IFRS 17 and summarises the requirements and simplifications available. We also have webinars tailored to national standard-setters and to investors.
Illustrative Examples published with IFRS 17 are also available. The examples portray hypothetical situations illustrating how some requirements in the Standard might be applied.
Use implementation support provided by the IFRS Foundation
As the preparers, regulators and investors in a jurisdiction become familiar with IFRS 17, implementation questions may arise. We provide support in addressing those questions:
Transition Resource Group for Insurance Contracts
We have established a transition resource group (TRG) that brings companies, auditors and regulators together in a public forum to discuss questions about implementing IFRS 17. Anyone can submit an implementation question to the TRG if it meets certain criteria.
The criteria, submission form and other TRG documents, including agenda papers and meeting summaries, are available on the TRG for insurance contracts page.
The TRG cannot issue authoritative guidance or amend the Standard; however, its discussions can help identify topics for webcasts or for consideration by the Board or the IFRS Interpretations Committee.
Other implementation support
Board members and staff regularly speak at conferences and other events organised by the IFRS Foundation or third parties. Information about events organised by the IFRS Foundation and links to supporting materials are available in our meeting and events diary.
We have also created a dedicated email address for questions about IFRS 17. Although we do not provide a formal technical enquiry service, such questions are useful for us to monitor IFRS 17 implementation and may result in further action. For example, we might develop further educational materials related to a specific question.
The materials available to support planning for implementation as well as details about how to contact us are available on a dedicated IFRS 17 implementation page. To receive alerts about any new materials that we publish, follow IFRS 17 Insurance Contracts.