IFRS 17: Year in review
18 December 2019
It’s unbelievable that this is my third IFRS 17 ‘year in review’ blog. This year so much has been accomplished by our clients, technology vendors and PwC alike. What’s more exciting is that we’re reaching critical mass - many are moving from design to implementation and markets all over the globe are taking the standard seriously. In this blog, I shall revisit some of my personal highlights and look ahead to 2020.
We started 2019 following amendments to the standard that proposed a one year delay. In our January Global IFRS 17 Webcast, we encouraged insurers to seize the opportunity to focus efforts on effective implementation, cost efficiency, and data and digital transformation. This was well received. One client used the opportunity to align their finance transformation to their data transformation ambitions - spending longer to design a strategic cloud architecture with a data lake solution. Another client spent longer on IFRS 17 vendor selection where we supported with use cases, test scenarios and scoring.
From the client meetings in Madrid to our IFRS 17 Training Event in Malaysia, my travels during the year revealed different transformation drivers and maturity levels across territories. Europe and South Africa has been ahead, but Asia is quickly picking up implementation efforts and Latin America is following suit with technical approaches and solution design. From travelling, I’ve also been privileged to form new friendships with clients and PwC colleagues. Our delivery team has grown to over 2,000 people working across over 180 IFRS 17 projects globally. The collaboration amongst our accountants, actuaries, tax professionals, technologists and process people is inspiring, and I hope we encourage the same across functions at our clients. The standard is an opportunity to bring your people together and embed new ways of working.
In February, we launched our PwC IFRS 17 Illustrative Financial Statements. This was great work by the PwC Insurance Industry Accounting Group (IIAG) and well-received by our clients.
In May, we ran our first IFRS 17 Assurance Training Event in Paris presenting our global Assurance propositions and discussed how best to engage our auditors and when. It’s clear that we can learn from our implementations and offer assurance activity second-to-none. Particularly towards the end of this year, we are definitely seeing accelerated audit work picking up on our major clients, utilising PwC’s Detailed Auditor Engagement Matrix.
A highlight has been the launch of our ‘IFRS 17 in a Box’ proposition. There was a clear gap in the market for a highly pre-configured IFRS 17 software solution for organisations not large or complex enough to run a dedicated finance transformation programme. Release 2.0 is ready for implementation, we have clients signed-up, and I look forward to seeing the end result. If you’re interested in hearing more about a PwC endorsed IFRS 17 end-to-end offering, take a look at our website and contact Immy Pandor.
In terms of the standard itself, there has been an unprecedented amount of engagement from the market on amendments. From the expected recovery of insurance acquisition cash flows to recovery of losses for reinsurance contracts held, some great comments have been made by our clients and further considerations will be made over the next six months.
Look ahead to 2020
The end is in sight. When I started conversations around IFRS 17, it was uncertain whether it would even mobilise and, if so, in what form. Here we are today with the IASB planning to issue final amendments in mid-2020 and many clients turning up the dial on implementation. There has been talk of a further deferral to the effective date - but it’s game on.
I consider insurers to be falling into three IFRS 17 maturity camps - and their 2020 will need to look very different. Those who are well advanced, possibly with an operational IFRS 17 calculation engine, will have the time to test technical approaches, focus on transition efforts and generate additional business insight. Others who are just starting, need to accelerate design and get building. Those who haven’t started need to take immediate action. Even if there is a further delay to the effective date, any IFRS 17 solution is a multi-year transformation and thinking about the investment as a strategic opportunity rather than a compliance exercise will reap benefits to your organisation in the long term.
Finally, I’d encourage you to follow our IFRS 17 blog. We have a lot to say in 2020.