fbpx
Potentash
  • Business
  • Entertainment
  • Fiction
  • Lifestyle
  • Travel
  • Skin + Beauty
  • Health
  • Relationships
No Result
View All Result
  • Login
Potentash
  • Business
  • Entertainment
  • Fiction
  • Lifestyle
  • Travel
  • Skin + Beauty
  • Health
  • Relationships
No Result
View All Result
  • Login
Potentash
No Result
View All Result

Business: A Glimpse Into The New Insurance Contracts Standard – IFRS 17

Wayne Matengo by Wayne Matengo
February 6, 2018
in Business, Insurance, News
Reading Time: 3 mins read
34 1
0
41
SHARES
230
VIEWS
FacebookTwitterWhatsApp

After 20 years in the making, the International Accounting Standards Board (IASB) has published the new accounting standard for insurance contracts, IFRS 17. It will be effective from 1 January 2021, with prior-year comparative reporting required. Here we provide a taster of the key changes to the recognition and valuation of insurance contracts that will affect general insurers.

Currently, comparisons across different industries, products, companies and jurisdictions are difficult. The IASB wants to achieve consistent accounting for all insurance contracts by all companies around the globe (although the US has opted out and US GAAP will persist) and enable comparability with non-insurance products.

Not only will this affect general insurers’ operations, but it will also introduce changes to the presentation of results in the financial statements as well as potentially having an impact on the financial results themselves.

One of the biggest concerns relates to the potential impact of IFRS 17 on future available capital. Depending on the linkage between local financial reporting and prudential regulation, in particular jurisdictions, the new standards could, in some cases, alter the available capital, which, in turn, impacts the amount of free capital that is available to support new growth opportunities, the payment of dividends and to conduct M&A.

For CEOs and executives who are tied into performance-based bonus arrangements that are informed by finance key performance indicators (KPIs), the new standards could change a variety of performance measures, specifically those using existing accounting bases, such as their remuneration packages.

Image from https://www.gaapdynamics.com/insights/blog/2017/06/06/say-hello-to-ifrs-17-insurance-contracts/

For those organizations yet to start thinking strategically about the business impacts of IFRS 17, here are five steps to consider:

  1. Create a cross-functional view.

Bring the directly impacted functions of accounting, actuarial and IT together with functions such as operations, marketing, distribution, product development and strategy, to create a holistic view of the potential impacts and strategies.

  1. Understand the implications.

Assess how the business impacts will influence current and future operating and business models. Consider what you might want to change in order to respond to these impacts and how these can be used to create competitive advantage.

  1. Assess the impact of local reporting and the impact of capital and dividend paying capacity.

Explore your various potential scenarios under IFRS 17 and consider how these scenarios may impact your capital ratios.

     4. Cross-check against your future strategy.

As the implications come into view, reassess your current and long-term business strategies and models to ensure these are being presented in their best light in the new world of IFRS 17.

  1. Talk to your stakeholders.

Talk to your key stakeholders – first internally in the business and then investors, regulators, brokers, reinsurers, agent networks and employees – to help manage expectations and ensure the right story is being communicated.

One of the biggest risks related to IFRS 17 is that executives view it as a purely technical initiative owned by accounting and actuarial. Indeed, with major business impacts looming, those that are not planning ahead and thinking about the impacts of IFRS 17 may find themselves veering off plan, or unable to meet commitments to shareholders, regulators or customers.

Those thinking strategically about the business implications of IFRS 17 today should be best placed to navigate the business impacts of the transition to the new standard in 2021.

 

Share16Tweet10SendShare3Pin4
Previous Post

Ikigai The Japanese Concept: Discover Your Passion With These Four Simple Steps

Next Post

From Upstart To Jumpstart: Investing In The Youth

Wayne Matengo

Wayne Matengo

I’m just a simple guy swimming in a sea of sharks.

Next Post
A mentor helps you by guiding you and giving you clarity on whats ahead. Image from http://quotesgram.com/mentor-mentee-quotes/

From Upstart To Jumpstart: Investing In The Youth

Please login to join discussion

Recommended

Poster from https://www.imdb.com/title/tt6676028/

“In A Relationship” Movie Review – Is The Grass Greener On The Other Side?

December 3, 2018
69
Father and son talking. Image from https://sparethekids.com/category/ask-mother-wit/page/2/

Parenting: 8 Ways To Mentor Your Kids At Home

August 21, 2020
306

Popular Stories

  • Woman crying as man comforts her. Image from https://livelystones.com.ng/communication-problems-with-wife-is-bothering-hubby-please-advise/

    I Went To Surprise My Husband At The Office Only To Find Out He Had Been “Working From Home” During The Pandemic

    613 shares
    Share 245 Tweet 153
  • My Divorce Left Me Broken

    192 shares
    Share 77 Tweet 48
  • An Uber Driver Ruined My Relationship

    146 shares
    Share 58 Tweet 37
  • An Office Affair Landed Me In The Hospital

    191 shares
    Share 76 Tweet 48
  • The Singlehood Series: My Husband Forced Me To Become A Housewife

    16 shares
    Share 6 Tweet 4
Potentash

Potentash is an award-winning lifestyle blog. We publish lifestyle content that intersects with health, women, beauty, travel, business, relationships, finances and entertainment.

Categories

  • Ethics Statement
  • Terms & Conditions
  • Privacy Policy
  • Contact Us

Copyright © 2022. Potentash, In Partnership with Decima

  • Login
No Result
View All Result
  • Business
  • Entertainment
  • Fiction
  • Lifestyle
  • Travel
  • Skin + Beauty
  • Health
  • Relationships

Copyright © 2022. Potentash, In Partnership with Decima

Welcome Back!

Sign In with Linked In
OR

Login to your account below

Forgotten Password?

Retrieve your password

Please enter your username or email address to reset your password.

Log In