Delay IFRS 17? – implications (part 1)
In 2016, IASB stated there would be no delay in implementing IFRS 17. However, national trade bodies have been lobbying for a delay. In the first of three articles on the delay implications, we consider the risks facing insurers if they pause their implementations until there is clarity.
Nine insurance trade bodies have collectively written to the IASB asking for an implementation delay; they included insurers representatives from the European Union (EU), Canada, Australia, New Zealand, South Korea, and South Africa. A month earlier, the Association of British insurers (ABI) proposed a delay of ”at least two years”. This is against a backdrop of some senior individuals at large insurers having agitated against IFRS 4 Phase II as early as 2015.
Insurance Europe has a particularly strong influence through EFRAG to the European Commission’s Accounting Regulatory Committee which has legal mandate over the EU’s bloc of 28 countries (including the UK post Brexit).
No-one yet knows whether the growing tide of opinion will have an impact on the effective date worldwide. In the meantime, two regulators have already declared a local delay, Thailand to 2023 and Taiwan to 2024.
Some insurers are slowing or pausing their implementation projects. We at @Innovation believe that delaying a project without clarity of a changed deadline is unwise. The are three reasons for our position:
Relying on a delayed implementation is a high-risk tactic that will undermine insurers’ ability to deliver if the effective date is not changed. Contingency plans can be put in place to manage a change in effective date without either threatening the current time line or wasting effort and cost.
In my next article I will look at the planning implications of change.
More information about IFRS 17 delivery can be found at Innovation's website
See also:
IFRS 17 one year on – let’s remind ourselves of our delivery objectives
IFRS 17 – IFRS 17 will change how investors regard insurers
IFRS 17 – Key changes to operational close process
IFRS 17 – Delivery white paper
Join our IFRS 17 Innovation think tank here