Reply To: IFRS17
Vanshika Gupta
<b><u>Impact on insurance sector</u></b>
IFRS 17 will include a new basis for valuing insurance contracts in the balance sheet as well as determining revenue/profit in the income statement, with actuarial principles at the core. Whilst the primary change is for financial reporting for listed companies (who report under IFRS), there are wider implications such as the relevance of internal commercial performance measures and potentially the valuations for mergers and acquisitions. The longer term future of UK GAAP for non-listed and mutual insurers (who haven’t adopted IFRS) is still to be decided by the Financial Reporting Council.
IFRS 17 will ensure much greater global consistency compared to the IFRS 4 practice today of permitting local accounting in each country.
*The Actuarial Perspective*
Not only will actuaries need to implement a new valuation basis requiring changes to data, models, methodologies and assumptions, but areas previously often not the responsibilities of actuaries such as the calculation of revenue and profit will also rely on probability based assessment so may fall to the responsibility of actuaries or perhaps more likely require close cooperation between insurers finance and actuarial teams. In addition, there will be extensive new disclosures many of which will require significant actuarial input.