Insurance Europe, the European insurance and reinsurance federation, has welcomed the decision of the International Accounting Standards Board (IASB) to defer the effective date of International Financial Reporting Standard (IFRS) 17, but argues that important issues remain unaddressed.
The implementation of IFRS 17 was originally set for January 1st 2021, but an amendment last year saw the effective date move back the start of 2022.
Now, in response to feedback on the amendments exposure draft, the IASB has voted in favour to defer the effective date of IFRS 17 (incorporating and amendments) to annual reporting periods beginning on or after January 1st, 2023.
However, Olav Jones, deputy director general of Insurance Europe, says that key industry concerns about the new accounting standard have still not been taken up by the IASB.
“While we appreciate that the effective dates of IFRS 17 and IFRS 9 have been postponed and that progress has been made on a number of the industry’s other issues, we are disappointed that the IASB has decided not to address concerns about the annual cohorts requirement and has also left other industry issues unresolved,” Jones said.
Insurance Europe does not anticipate that the two-year delay to IFRS 17 will stop or slow down implementation projects.
Rather, the federation believes that it will allow companies, including smaller entities, to cope with real operational constrains and, where relevant, regulatory impacts.
“We welcome the decision to postpone the effective date of IFRS 17 and to extend the exemption currently in place regarding the application of IFRS 9 – financial instruments – to 2023, which will enable insurers to implement both standards at the same time,” Jones continued.
“IFRS 17 introduces numerous and fundamental changes to balance sheet measurement and P&L presentation,” he explained.
“These will require significant thought and development relating to modelling, data, actuarial resources, IT systems, staff training and investor communications. In addition, postponing the effective date allows for a globally consistent adoption date.”