Does the insurance community think IFRS17 is adding value?

What do we mean with value?

I feel like this is one of those questions which hits a sore point. Adding value is very vague, I agree, and it depends who you’re asking. There are various schools of thought amongst the colleagues and insurers I’ve worked with in the past. Some with very interesting views. I’m passionate about IFRS17 and thus biased towards the implementation of IFRS17. So, I wanted to dig deeper. I asked my fellow LinkedIn connections to share their thoughts on the matter. Around 52 LinkedIn respondents (thanks to those who entered the poll by the way!) answered the following question:

“What’s your view on IFRS17? Does the benefit of IFRS17 exceed the IFRS17 implementation costs?”

What did our LinkedIn connections say?

Let’s bear in mind that 52 respondents on LinkedIn is probably not enough to capture market sentiment (unless we’re extremely lucky!).

What can we conclude from the poll results above:

• The good news is that there’s more yesses than clear no’s (37% yes vs 23% no).
• The bad news is that 63% of respondents are either unsure or don’t think that IFRS17 will add more value than the cost of implementing it

So perhaps we need to explore a little further why we are actually implementing IFRS17?

Check out this article where I explore further why we are implementing IFRS17 again.

Does your perspective matter?

When looking deeper into my respondents’ profiles I did note something interesting, even if only slightly significant. Those who responded:

• “No, I don’t think so” mostly worked as employees of insurers (internal to insurers)
• “Yes, by far!” are mostly consultants (external to insurers)

So that begs the question, does your perspective not influence what you deem as the “benefit” of IFRS17? Does it not matter who bears the cost of implementation or perhaps the measures we use to answer this question?

• If your measure used to answer this question is “adding value to your customers”, does IFRS17 feel like a distraction to achieving that goal? Or does it help?
• If you need to compare insurance company results (as an external party) or if you want to be able to understand how insurers globally report their results, does IFRS17 help you achieve that goal?
• If you need to limit the expenditure of your company, does IFRS17 not feel like a burden?
• If you audit a client, would you not feel more comfortable signing off if your client is using up to date market consistent assumptions like all the other market participants?

What did I learn?

Don’t be offended when getting different views on this question. We all use different measures to answer this question. Different parties bear the cost of implementing IFRS17 and we need to be respectful of this as well. The parties who benefit from IFRS17 are possibly not always the parties who incur the cost of implementing IFRS17. Even though the cost is probably born by the policyholders, I’m sure it’s frustrating for insurers to add on this cost to their prospective and current policyholders.

My view, I’m all for IFRS17 and I love the impact IFRS17 has on the insurance industry. I now understand better than ever how reporting works (or rather will work) across different regions and insurers in the market. I’ll also be much more capable of making more informed judgements and decisions about the insurers I’ll be assisting in the future.

Did you have any comments? Please leave a comment and let me know what you think.

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