IFRS 17: Global Webcast – Where are we 1 year on?
31 July 2018
On the 27 June, three expert panel members and I took to the airwaves as part of PwC’s Global IFRS 17 Webcast, to discuss how IFRS 17 is developing one year on from the official announcement. In this blog, I will briefly summarise the keys points that were discussed – to listen to the full webcast, follow the link below and register for the webcast on demand.
One year down the line, it is fair to say that implementation of IFRS 17 is gathering significant momentum. PwC has been involved in over 100 projects related to IFRS 17, with 1252 people engaged on the topic worldwide. Personally, I have spoken to over 50 clients in addition to regulators, tax authorities and analysts, and have seen first-hand the work that IFRS 17 has inspired.
Darrel Scott, from the International Accounting Standard Board (IASB), has spent the past year focusing on the 4 key initiatives of the IASB to become more involved in the implementation phase of IFRS 17: to increase engagement with investors, increase engagement with regulators, increase the quantity and quality of training available to investors, and finally the introduction of the Transition Resource Group (TRG), a formal platform that is used to surface problems and address challenges regarding IFRS 17.
Darrel closed by outlining the top three issues that insurers are currently experiencing; issues relating to reinsurance, issues relating to the presentation of the balance sheet, and issues relating to the short time frame before the effective date.
Gail Tucker, lead technical accounting expert at PwC, agreed with Darrel regarding a top issue insurers are currently facing is the new presentation of the balance sheet, which will likely be less symmetrical than traditional balance sheets. Gail went on to mention a variety of other top technical issues, including reinsurance, coverage units and Contractual Service Margin, separation of insurance contracts and business combinations.
Alwin Swales, operations and technology partner at PwC, addressed the issues he is seeing with the practical implementation of IFRS 17. One of the biggest practical problem that insurers are facing is the lack of training within their companies. For the majority of companies, when the standard was introduced, training was given to a small group of people who would be directly involved in the standard. However, as the true breadth of the IFRS 17 impact emerges, it is clear that training needs to be expanded to include people in all areas of the business. Additionally, insurers are being caught out by assumptions that were made early on during the impact analysis stage, as emerging details are proving the assumptions to be incorrect.
In a more positive light, Alwin states that due to the events that transpired during the Solvency II implementation, insurers are taking a much more cautious approach to the technology market to ensure that the technology solution they select is the right one. Technology is still evolving, in that there are not currently any ‘silver bullet’ solutions, but some companies have taken the plunge and acquired technology globally.
Finally, insurers still appear to be making the mistake of assuming that IFRS 17 has no impact on working day timetable and data. Alwin believes that, on the contrary, when we consider the volume of data insurers will be dealing with, the additional calculations that will be slotted into the timetable, and the interaction of Solvency II, insurers need to spend more time considering the impacts of this.
Overall, the entire panel agreed that despite insurers struggling with the transition from gap analysis to actual implementation and the many issues that some have encountered along the way, now is not the time to stand back and reflect; now is the time to really knuckle down and push on ahead with plans.