The International Financial Reporting Standard 17 (IFRS 17), which is set to be implemented come 2021, is laden with problems that need to be sorted out first.
At least that is as far as Insurance Europe is concerned. Citing studies by the European Financial Reporting Advisory Group (EFRAG), which highlighted several concerns, the European insurance and reinsurance federation has called for the effectivity date to be moved by a further two years.
“There are problems with the way the standard depicts insurers’ performance and business models that must be resolved before IFRS 17 is endorsed,” noted Insurance Europe. “IFRS 17 must be reopened and the 11 issues that were identified during EFRAG’s testing must be addressed.”
Insurance Europe is of the view that a delay is necessary not only in order to improve the reporting standard but also to afford affected firms the time they need to carry it out.
“The decision to reopen IFRS 17 should be made as soon as possible and as much clarity given on the impact on the application date to allow companies to plan accordingly,” it stated. “However, there is no expectation that a delay will result in companies pausing implementation projects.
“The additional time will allow insurers to deal with operational constraints, such as the current lack of software solutions, and will allow for implementation of suitable quality and reliability. It will also allow for a better understanding of the potentially very different new financial reporting figures.”
Insurance Europe added that the industry is “well advanced in its efforts” to put forward workable solutions to the issues.