IFRS 17 How to minimize the effort of implementing IFRS 17?


How to minimize the effort of implementing IFRS 17 ?

As our clients ask us how we would implement IFRS 17 we wrote this paper to present our approach. The purpose is to minimize the effort.

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In 1997, the IASC (future IASB) initiated the draft of a specific standard for the insurance sector that led to the publication in 2004 of IFRS 4 (phase 1). This new standard was not intended to revolutionize the sector but rather to provide a first frame of reference. Its field of application is pure insurance contracts. Some products sold by insurance companies, like branch 23 products, not being pure insurance contracts are outside the scope of the standard.
IFRS4 had two main characteristics: the first one is that it permitted companies to continue their accounting practices and the second is focused on enhanced disclosure on the amount, timing and uncertainty of future cash flows from insurance contract. This often led to a mismatch between assets being valued at market value while the insurance obligations were treated at historical value. Furthermore, the disclosures often proved not to give enough information on the contracts’ composition and their correct classification under the standard.
IFRS 17 intends to revisit this and implement the mark-to-market logic to insurance liabilities while improving the disclosures.
IFRS 17, released in May 2017, is effective for annual periods beginning on or after 1 January 2021. Earlier application is permitted if an entity already applies IFRS 9 and IFRS 15.
In a lot of cases, client tell us they need to embark on a brand-new project similar in magnitude to Solvency II. We believe some simpler approach can be followed.


Alex Takou – Khagan, Consultant
Jean-Christophe Mathonet – Khagan, Associate Founder

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