IFRS 17: Year In Review
16 December 2020
Australian wildfires and COVID-19 created significant challenges for the insurance industry during 2020. Yet through turbulence and changes to ways of working, the need to deliver IFRS 17 remains constant.
March saw the IASB delay the effective date to 1 January 2023 and then amend the Standard in June. But make no mistake, IFRS 17 is now at the final stage. Some insurers have used the time to increase business value from their investment in IFRS 17 transition and de-risk the delivery, or in some cases stop the projects altogether. And it’s clear organisations have different objectives for their transition - from minimum compliance to a strategic Finance Transformation. This December our global webcast, ‘It’s time to accelerate’, concluded:
- there’s not much time left to implement IFRS 17 effectively
- companies are looking at a Plan B in case their original software solution is not working
- IFRS 17 compliance is starting to be a staging post on the road to a longer Finance Transformation journey
Another highlight has been the growth of our global, multi-disciplinary IFRS 17 delivery team. 3,200 people, 250 global IFRS 17 projects, and a dedicated team implementing our award-winning IFRS 17 In A Box solution in addition to launching PwC Managed Services for smaller clients.
I couldn’t write a 2020 summary without discussing In A Box! I’m proud of how our accountants, actuaries and technologists have been able to focus our insights into a complete solution offering. And it's great that the hard work of Paul, Immy and the team in taking the headache out of IFRS transition has been recognised more broadly - with success at the Chartis Research awards.
Looking ahead at 2021, there are three trends that we’ll be focusing on.
Engage your auditorFor large and medium insurance clients, proactive assurance will benefit your programme. But there is significant audit effort that would be required ahead of implementation of the standard. Your auditor must be comfortable with your technical decisions, end-to-end solution and transition results. If you consider the amount of effort insurance companies have invested in their IFRS 17 projects already, and the period of time over which this investment has been required, engaging with your auditor too late could have detrimental consequences.
Finalise your technology solution and consider a Plan BFor those that haven’t, 2021 is the year you should select key components of your IFRS 17 solution architecture and get the implementation underway. We’re having many conversations with organisations reconsidering their end-to-end solution based on vendors not delivering or emerging data challenges. A ‘Plan B’ is something we’re encouraging organisations to have should technology components experience delays.
Think about how you will communicate with external stakeholders to get the most out of your IFRS 17 KPIsAs the effective date looms, we have seen insurers beginning to focus on the impact of IFRS 17 on KPIs and reporting metrics. In the run up to transition over 2021, we suggest you focus on:
- Plans to manage this phase of the transition effectively, including when you should first report IFRS 17 results to the market and whether this will be in advance of the mandatory date
- Educating key stakeholders such as analysts, investors and Board members on how results will differ under IFRS 17
- Building KPIs into the core IFRS 17 processes and systems. We’ve recently published our latest thinking on IFRS 17 transition and KPIs.
Finally, it remains to say Merry Christmas and a Happy New Year. This festive season may not be the same - I’m missing celebrating with my colleagues at the annual Winter Ball - but enjoy the time-off with those around you (whether physically or virtually). Stay safe and stay tuned for the Accelerated Journey which will be IFRS 17 in 2021.