Almost seven out of 10 used the new standard for financial results for the first time in 2023.
Insurers have highlighted the significant challenges remaining after reporting their half-year 2023 results under IFRS 17 for the first time, as revealed through a global survey by WTW.
The study, which polled 235 insurers from 37 markets, includes 160 (68%) reporting for the first time in 2023.
The Key insights from IFRS 17 study.
The report pointed out that while there has been material progress, participants state that substantial work is still required post-implementation.
Meanwhile the availability of data of skilled resources, and systems/technology are identified as the primary challenges for IFRS 17 production.
Only 55% of 2023 reporters felt “very confident” in explaining IFRS 17 simple scenario results to senior management or investors. This confidence drops to 18% and 9% when explaining complex and extreme scenarios, respectively, while over half of 2023 reporters are not prepared for business planning/P&L projections based on IFRS 17/9.
Nearly 70% of 2023 reporters expect a longer working-day timetable (WDT), emphasizing the substantial effort required to make IFRS 17 a routine part of reporting and address critical issues. These include shortening the WDT, material system/process improvements, and enhancing analysis and understanding of IFRS 17 results.
Overall, despite the challenges, nearly all 2023 survey participants confirmed that dividend-paying capacity remains unaffected by IFRS 17.
The estimated total cost for the global insurance industry to implement the IFRS 17 accounting standard is now in the range of US$21 billion to US$27 billion, reflecting a significant 15% increase compared to the 2022 assessment. The predicted average cumulative program costs for the largest multinationals are now US$240 million each, and US$30 million each for the remaining insurers.
“With insurers facing hefty costs to implement IFRS 17, future investments need to be strategic and targeted, delivering quick and tangible benefits. Substantial operational efficiencies also need to be found to maximise the benefits of IFRS 17 and move the reporting into business as usual,” WTW global IFRS 17 advisory leader Kamran Foroughi said.
How do these findings compare to last year’s report? In 2022, WTW reported that only 40% of 26 large multinationals polled and only 20% of the other 244 companies expected to deliver fully prepared IFRS 17 programs on time.
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