Five areas of focus for general insurers during IFRS 17 project planning and implementation

Phil Gough and Vikash Saraf

A look at some key topics to support management in effectively delivering IFRS 17, with consideration of the different national and regulatory transition timelines and requirements

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Phil Gough and Vikash Saraf


With the imminent arrival of International Financial Reporting Standard (IFRS) 17 Insurance Contracts, many insurance and financial institutions are already in the midst of their implementation programmes. In this age of big data and expanding workloads, many institutions have turned to third-party solutions to lessen the pressure of implementation. Although outsourcing IFRS 17 system implementations can ease pressure on daily operations in the short term, there are longer term considerations to assess together with many other issues for management to address beyond system implementation. This article focuses on these challenges in the context of general insurance (GI) companies.

Differences in the mandatory effective date of IFRS 17 across Asia-Pacific

Across the Asia-Pacific region, many jurisdictions with mature insurance markets have opted to align with the IFRS 17 adoption date of 1 January 2023. This includes all insurers in Australia, New Zealand, Hong Kong, Malaysia, Singapore, South Korea and listed insurers in Mainland China. Many other countries have deferred adoption to later dates between 2024 and 2026 (including unlisted insurers in Mainland China). GI companies with business in more than one jurisdiction need to consider whether jurisdictional differences in the mandatory effective date could affect their implementation timelines.

The transition steps required

GI companies should consider the full functional scope of implementation steps required. Although the IFRS 17 transition is primarily driven from an accounting perspective, collaboration with actuarial and information technology functions will be just as vital for implementation success. In addition, there are potential impacts on related areas. For example, in treasury activities, IFRS 17 will have an effect on current interest rates and other financial variables on the measurement of profit and loss where they previously were not applied. Another example is in human resources, where remuneration and incentives are based on accounting results that are materially changing.

Changes to management reporting

To support GI company finance teams to better adapt to changes in external and internal reporting arising from IFRS17 adoption, training programmes can be leveraged to learn the different measurement models under IFRS 17 and how they are applied. Teams will likely need to update and adapt management information and potentially produce key performance indicators (KPIs) using new measurement methods or decide what new KPIs are necessary. On top of these challenges, there needs to be a clear understanding of how existing products and accounting treatments under IFRS 4 Insurance Contracts will be transitioned to IFRS 17. In a global survey conducted by Deloitte a while ago, a substantial portion of participants agreed that the implementation of IFRS 17 would result in companies changing their product design and KPIs. This is now happening and, apart from considering their existing platforms and products under IFRS 4, GI companies are now considering how IFRS 17 will influence future product offerings.

Impact on data, systems and processes

In the global survey cited earlier, participants also expressed concerns regarding the complex requirements surrounding data, systems and processes (DSP). The key issues highlighted include reporting compliance at the consolidated group level, remapping of their charts of accounts and testing to ensure auditability. This is potentially more taxing for GI companies that currently use a significant level of manual processes. In addition, while GI companies will generally be able to comply with the level of granularity required from IFRS 17, the DSP changes will still bring additional stress to a GI company’s daily operations, and require more resources. For example, GI companies will need to incorporate in their project the time required to bridge and test information systems between IFRS 4 and IFRS 17 to ensure financial reporting compliance during the transition.

Implications for executive management

Aside from compliance and data management considerations, GI companies should also factor external stakeholder expectations into their IFRS 17 implementation projects. With increasing demand for higher audit quality and accountability from market participants and regulators alike, GI companies should consider the quality and auditability of their new IFRS 17 data, including addressing key areas such as audit trails, internal controls and governance processes. While GI companies can leverage existing data under IFRS 4 to a greater extent than life insurers, there are still many accounting changes driven by IFRS 17 that will result in the need of a refresh of most related processes and controls.

Getting a sense of the likely financial impact of IFRS 17 on a GI company’s results will grow in importance as deadlines approach. Questions should also be expected about the anticipated financial impact on results and KPIs. Managing this stakeholder engagement can be built into IFRS 17 implementation projects from an early stage to allow time to develop and explain the anticipated financial impact as well as to collate and present new KPIs that are indicative of a GI company’s performance and comparable with pre-implementation indicators.

GI companies also need to consider the requirements of external regulators, such as the Hong Kong Monetary Authority and the Insurance Authority. Most regulators in the Asia-Pacific region will have varying requirements to address IFRS 17 accounting changes and ensure compliance in support of their broader supervisory needs, many of which will change to rely more than before on financial reporting and the underlying IFRS 17 books and records.

Efficacy of solutions can vary

As is often the case when implementing new complex accounting standards, technology solutions have emerged in the market. Mindful that many of these solutions can have very specific data requirements and may not align to management information needed to run the business, GI companies need to consider a solution’s compatibility with their existing systems and broader reporting requirements. An extensive research project conducted by Deloitte found that a DSP upgrade will be one of the top complexity drivers of the IFRS 17 implementation process. Concerns such as reporting functionality, compatibility with existing enterprise resource planning systems, the extent of customization, and reconciliation or testing capabilities should inform the selection of an IFRS 17 solution. A solution without such features may increase the risk of an implementation breakdown and add operational stress to future finance activity post IFRS 17 implementation.

Cost-saving is often a priority when choosing between an external solution and an in-house solution. It is important to identify all related costs, including the degree of assistance to implement a solution, and the ongoing costs post implementation. GI companies should also consider the level of understanding that their accounting, actuarial and IT teams have of the IFRS 17 requirements before considering external solutions. This can equip the selection team with the knowledge to be in the best position to assess whether a solution meets the reporting requirements of the business. A benefit of this approach is that GI companies can better focus on the areas where more support or attention is needed for their IFRS 17 implementation.


The IFRS 17 implementation is a significant challenge but it also presents an opportunity to develop more automated solutions and to deliver efficiencies in the reporting processes, including the opportunity to move towards cloud-based platforms to facilitate and support remote working. Although budget constraints may limit GI companies’ appetite for new platforms, this upfront implementation cost can be balanced against future operating efficiencies and the opportunity to improve governance and controls over the reporting process. Irrespective of the platform used, GI companies should consider their requirements for managing DSP ahead of implementation.

When considering the resources required for IFRS 17, GI companies should carefully assess their current resources, capability, capacity, and understand the quality and nature of existing DSP and the implementation complexity of any chosen IFRS 17 solution. Management should also be aware of how IFRS 17 will impact KPIs, financial and management reporting, as such changes may greatly affect the perception of the internal and external performance of the GI company. Lastly, with remote work being today’s new normal, GI companies should take advantage of the opportunity for change, and consider implementing systems and platforms that enable virtual collaboration and offer a resilient platform for finance to successfully operate even under operational stress scenarios.

This article is contributed by Phil Gough, Partner, Audit & Assurance, and Vikash Saraf, Director, Audit & Assurance, Deloitte China.

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