IFRS 17: A Global Challenge or an Industry Opportunity?
07 June 2021
Last week, over 500 clients joined our IFRS 17 global webcast ‘A Global Challenge or an Industry Opportunity?’. I took the screen alongside Gail Tucker, PwC’s leading technical expert, Alwin Swales, our lead operations and technology partner, and our three regional leaders. With the clock ticking in advance of the 1 January 2023 effective date, we wanted to share observations as programmes hit the details of the Standard and implement the requirements.
One of the technical topics that we discussed was transition; transitioning to IFRS 17 requires judgement. There are challenges such as what does ‘impracticable’ mean when determining which transition approach should be followed; and what is the fair value when applying the fair value approach? These judgements on transition to IFRS 17 will affect shareholder equity as well as reported revenue and profit reported in subsequent years for many life insurers. We also discussed the difference between the IFRS 17 and IFRS 9 requirements on the restatement of comparatives, and how the IASB has heard about how this can lead to an accounting mismatch and is considering a narrow scope amendment to IFRS 17. See our ‘In transition’ explanation for the details and refer to our articles on transition.
Alwin shared that while clients have to be ready by the effective date - not all clients will be in the same place and their experience over the next 18 months will be different. Across our global top 30 client teams, there are a number of ongoing focus areas and topics that we’re seeing a resurgence in.
Clients are currently in the thick of re-design as they mature policy decisions, validate or change earlier assumptions, profile data (which sometimes doesn’t match working assumptions) and scale their solutions (which sometimes proves more difficult than expected). There is no perfect vendor solution in the market though many solutions are improving functionality and levels of configuration as they learn from client experience. Some clients are even looking at a multi-vendor or tactical solution to reduce pressures on their strategic solution. More to come on that in an IFRS 17 In A Box blog soon.
In terms of resurgence, business readiness is high on the agenda focusing on target operating models, process engineering, the Working Day Timetable (WDT), financial planning and analysis, and even data management solutions. Interestingly, many clients are also doubling down on IFRS 17 training and education. People outside the programme need upskilling on the IFRS 17 requirements, new processes and new technologies. If this applies to you, explore IFRS 17 content from our People Centred Change Consulting team and consider our eLearns.
I encourage you to play back the webcast to listen to the updates from the regional leaders. We also have a series of IFRS 17 roadshows underway where you can connect with our local IFRS 17 teams.
You can feel the sense of anticipation, excitement and no small amount of trepidation. We’re on this IFRS 17 journey together over the remaining 18 months. Connect with your auditors and make the most of our articles, blogs and webcasts.