IFRS 17 delayed until 2023 giving insurers more time to make changes
The International Accounting Standards Board (IASB) has proposed to delay the implementation of IFRS 17, the new accounting standard, to January 2023, following widespread calls by trade bodies to postpone the introduction.
Additionally, the board has proposed that the expiry date of the IFRS 9 temporary exemption for insurance contracts be extended to January 1, 2023 to coincide with the proposed effective date of IFRS 17.
This represents a one-year delay to the date proposed in the June 2019 Exposure Draft Amendments to IFRS 17 and a two-year delay to the effective date set out in IFRS 17, as issued in May 2017.
IFRS 17 had been due to be implemented at the beginning of 2021, but the date was put back to January 1, 2022, after lobbying from the industry.
Global insurers have been calling for a delay and improvements in the introduction of the IFRS 17, allowing them additional time to help alleviate some risk from existing plans.
Commenting on the decision to further defer the effective date of IFRS 17, Ralph Ovsec, senior director at Willis Towers Watson, said: “We believe these extensions have addressed a number of the concerns raised by the industry and coordinate implementation efforts of IFRS 17 and IFRS 9.
"We encourage companies to continue to press forward at current pace and use this additional time to strengthen their processes and procedures as well as allow for more testing, dry runs and contingencies. We also believe a shared effective implementation date for IFRS 17 and IFRS 9 will avoid temporary earnings mismatches that would otherwise exist and reduce implementation costs."
Ovsec added: "The current global environment adds significant resource and time constraints to insurers’ operations, and this additional respite will reduce those near-term pressures on insurers.”
Alex Bertolotti, global IFRS 17 leader at PwC, said the delay "recognises the practical difficulties for many insurers in implementing the significant changes".
“The IASB’s decision to further defer the effective date to 1 January 2023 is a welcome one," he said. "The extra year gives some insurers a chance to consider how to derive more business value from their extensive IFRS 17 projects.
"For others, it will de-risk the delivery timetable. The additional time will also be welcome as insurers consider how they can use IFRS 17 to tell a clearer and more understandable story about their company.”
The IASB is expected to issue the amendments to IFRS 17 around the middle of the year.
