The International Accounting Standards Board (IASB) has voted in favour of delaying the implementation of new International Financial Reporting Standard (IFRS17) for one year to 1 January 2022.
The new accounting standard had originally been planned for January 2021 but financial bodies, as well as insurers and reinsurers, have been calling for delays.
Last month, a global group of nine insurance associations penned a joint letter to Hans Hoogervorst, chair of the IASB, underscoring concerns surrounding IFRS17’s impact on insurance contracts.
In addition, the IASB has confirmed an agreement that re/insurers that could postpone implementation of IFRS9, the accounting standard for financial instruments, by one more year so that it will now come into effect alongside the implementation of IFRS17.
Deutsche Bank last month stated that the new standard will have mixed results for reinsurers in different sectors.
Commenting on the decisions from today’s IASB meeting, Alex Bertolotti, IFRS17 leader at PwC, said the delay will be welcomed by many in the insurance community.
“The additional time will help alleviate some risk from existing plans, however many companies still have a lot to do and cannot afford to press pause,” sated Bertolotti.
“Some insurers have been lobbying for this delay for a while, as the initial time frame was exceedingly tight. Others have been requesting clarification over certain aspects of the standard, without which it would have been difficult or prohibitively costly to move ahead.”
“The impact of the one-year delay can only be fully assessed after reviewing potential changes to the standard which the IASB Board will consider in December.”
Bertolotti added, “Our message to insurers would be not to stop – there’s so much to do. If you haven’t started, get a move on. To stand still is to fall behind.”