For some of the larger domestic industry players, the heavy lifting regarding IFRS 17 (the “Standard”) has already been done, as implementation projects move into the parallel run and similar advanced stages. Most (re)insurers are in the mid stages of their implementation projects with some entities yet to commence their implementation activities. For those entities yet to embark on their implementation journeys, time is most definitely getting short.
A recurring theme from all implementation projects is one of technical complexity and associated costs of transition. In recognition of the significant stakeholder feedback on the Standard, which centred on the burden of implementation, the International Accounting Standards Board (IASB) issued a set of amendments in June 2020 designed to:
- reduce costs by simplifying some requirements in the Standard;
- make financial performance easier to explain; and
- ease transition by deferring the effective date of the Standard to 2023 and by providing additional relief to reduce the effort required when applying IFRS 17 for the first time.
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Whilst the amendments were well received, an IFRS 17 implementation project still represents a major undertaking for (re)insurers required to comply with the Standard. Given that Financial Reporting Standard 101 ‘Reduced Disclosure Framework’ (FRS 101) will no longer be a permitted financial reporting framework for (re)insurers from 1 January 2023, a decision is required as to whether (re)insurers currently reporting under FRS 101 transition to IFRS (including IFRS 17) or Irish GAAP (comprising FRS 102 ‘The Financial Reporting Standard applicable in the UK and Republic of Ireland’ and FRS 103 ‘Insurance Contracts’). It will be a number of years following the introduction of IFRS 17 before the Financial Reporting Council conducts a review to potentially align FRS 103 with the requirements of IFRS 17. Careful consideration will be required as (re)insurers evaluate their financial reporting options as, after many false dawns, the clock has now begun its final countdown.