The International Accounting Standards Board (IASB) has voted to defer the effective date of IFRS 17 insurance contracts to January 1st, 2023.
The effective date was originally set at January 1st, 2021 before an amendment in 2019 saw the effective date move by one-year to the start of January 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.
Furthermore, the IASB also voted to extend the fixed expiry date of the temporary exemption from applying IFRS 9 in IFRS 4 to annual reporting periods beginning on or after January 1st, 2023.
In light of the delay by one-year from the date proposed in June 2019 and by two-years from that set out in IFRS 17, industry participants have commented.
Alex Bertolotti, global IFRS 17 leader at PwC, said that the move from the IASB was welcomed.
“It recognises the practical difficulties for many insurers in implementing the significant changes brought about by IFRS 17. The extra year gives some insurers a chance to consider how to derive more business value from their extensive IFRS17 projects. For others, it will de-risk the delivery timetable.
“The additional time will also be welcome as insurers consider how they can use IFRS 17 to tell a clearer and more understandable story about their company,” said Bertolotti.
Ralph Ovsec, Senior Director at insurance and reinsurance broker Willis Towers Watson, has also commented and said that the extension addresses a number of concerns that have been raised.
“We encourage companies to continue to press forward at current pace and use this additional time to strengthen their processes and procedures as well as allow for more testing, dry runs and contingencies. We also believe a shared effective implementation date for IFRS 17 and IFRS 9 will avoid temporary earnings mismatches that would otherwise exist and reduce implementation costs.
“The current global environment adds significant resource and time constraints to insurers’ operations, and this additional respite will reduce those near-term pressures on insurers,” said Ovsec.
IFRS 17 is an International Financial Reporting Standard that was issued by the IASB in May 2017.