Suits The C-Suite

The financial statements of companies issuing insurance contracts are bound to change dramatically beginning Jan. 1, 2022, as the date marks the global adoption of International Financial Reporting Standard (IFRS) 17.

IFRS 17 introduces the concept of deferring profit and recognizing this profit over the duration of the contract. This significantly changes the way companies measure and account for long-term insurance contracts. This poses the question of whether current financial metrics will remain relevant (such as gross premiums as a basis for ranking) and even if so, new metrics will surely be introduced (such as the future profits for new business) upon adoption of IFRS 17.

Along with this key change, several requirements of IFRS 17 will force companies to implement changes to their data, systems and processes.

While local companies are given an additional one-year reprieve at this time, companies should ideally be either in the last stage of their impact assessment or in the early phase of their implementation.

Though the implementation experience varies from one company to another, several unique insights and lessons can be gained from each company’s IFRS 17 journey. We present seven important lessons learned from our own live IFRS 17 engagements which are bound to benefit the insurance industry.

It is essential for companies that have not started any IFRS 17 activity to begin with a comprehensive data gap analysis. This will provide a view of the extent of work needed to implement IFRS 17. While 2023 might seem far away, it will easily take an average of 12-15 months to change systems and processes that conform with the new rules. Extra time will be better spent on parallel runs rather than on impact assessment.

A detailed timeline including milestones and key dates should be clearly in place, with leeway for potential setbacks, whether these are caused internally or externally. Several key decision points that can affect the overall implementation journey also need to be addressed early on. The most critical of these is deciding whether the ambition level for change is for minimal compliance, smarter reporting, or a full finance transformation.

Implementing IFRS 17 is more than just an accounting and compliance task; it should encompass a team that consists, at a minimum, of the following competencies:

a. Accountants

b. Actuaries

c. Finance Subject Matter Experts

d. Technology Subject Matter Experts

e. Project and Change Managers

Currently, there is a scarcity of talent equipped with IFRS 17 knowledge and experience to lead and drive the implementation. A reasonable assessment of a company’s internal resources should be performed to match each employee’s skills and availability to identified workstreams. Accountants and actuarial resources for most insurers are already stretched with business-as-usual (BAU) activities and other ongoing conflicting internal initiatives. This resulting gap must then be properly addressed with IFRS 17 content owners and drivers, whether to hire new employees or contract external advisors. The team should also have a strong and effective project manager with IFRS 17 content knowledge to ensure everyone is on the same boat and that key stakeholders are well-briefed and engaged.

To plan for a sustainable future, companies need to adapt to an evolving relevant mix of resources, skills and capabilities to properly implement expected changes in the business under the new standard. A clear governance structure should also be in place to enable the timely alignment of key decision points.

IFRS 17 has extensive requirements for data quality, calculation, transfer and storage. Experience suggests that data cleansing should be initiated, considering both accounting and actuarial perspectives, before embarking on any data transformation. Though it may vary from one company to another, securing the availability of clean and controlled source data to be extracted can take longer than expected. Significant time in the project plan must be invested to determine how information would feed smoothly into the IFRS 17 Information Technology solution.

The vast data requirements will then need to be managed continually and effectively. This can be particularly useful for decision-making factors such as real-time data driven pricing models, “what if” scenarios, determining the most critical key performance indicators, and identifying high-risk transactions or customers.

For large multinational companies, it is apparent that one of the significant line items in the IFRS 17 budget will be the cost of acquiring a new system or changing an existing one. Most companies expect to change existing systems to operationalize and further centralize their modelling systems. While certain life companies have decided on a software vendor, most are still in the process of vendor evaluation and selection.

One of the challenges encountered is the current assessment of system architecture. This pertains, but is not limited, to the complexity of system architecture, data granularity to support required reporting in the future, current functionality uses and existing model updates, the number of reporting basis and ledgers, and the alignment of various processes under one workflow software, whether this is built in-house or purchased.

There is no magic “one size fits all” solution available but companies in the midst of designing or upgrading their systems, need to revisit their programs to consider the potential impact of the proposed IFRS 17 amendments. In addition, a big consideration is to have an integrated data model covering both actuarial and finance systems, ensuring that the technology and data are aligned and not just the workstreams.


IFRS 17 training should be provided to core team members to keep them abreast of current developments and proposed amendments. Collaborative awareness and education sessions must be continually adopted with a phased rollout approach not only for key team members but also for other relevant internal and external stakeholders. Moreover, members of the core team should be expanded to include members of BAU processes to facilitate a smooth transition.

Participating in industry working groups, advocacy initiatives with local regulatory bodies, and submitting comments and feedback to the International Accounting Standards Board will enable companies to raise peculiarities or transactions requiring special handling. The earlier the concerns and challenges are heard and addressed, the easier it will be for companies to incorporate necessary action required in their implementation activities.

Proactiveness in reaching out to national standard-setting bodies and regional groups has a vital role in ensuring that the interests of the company are heard. These groups undertake relevant research, conduct surveys and identify emerging issues, thus providing further opportunities for companies to benchmark against the experiences and best practices of one another.

Consideration to turnover, the language, and communication methods for employees to manage resistance and change fatigue, should be in put in place. External stakeholders must also be included in the plan, as many will be interested to know the projected changes to key performance indicators and revenue-driven metrics that will serve as the new language when presenting business results.

As the timeline shortens with the approaching deadline, the key to a successful and relatively smooth adoption generally rests on management ensuring that the collaboration of the several moving pieces is closely monitored. Companies can take this as an opportunity to adapt and emerge from the change to further drive growth and agility.

This article is for general information only and is not a substitute for professional advice where the facts and circumstances warrant. The views and opinion expressed above are those of the author and do not necessarily represent the views of SGV & Co.


Faith Mariel N. Reoyan is an Advisory Senior Manager of SGV & Co.