Implementation of IFRS 17 delayed by one year
The International Accounting Standards Board (IASB) has voted to delay the implementation of IFRS 17 for one year to Jan. 1, 2022.
The accounting standard for insurance contracts was originally scheduled to become effective in January 2021, but there have been widespread calls by trade bodies to delay the introduction.
Board members have also agreed that insurers could postpone the implementation of the accounting standard for financial instruments IFRS 9 by another year.
Commenting on the decision from today’s IASB meeting Alex Bertolotti, IFRS17 leader at PwC, said: “Today’s announcement of a one-year delay to the implementation of IFRS17 will be welcomed by many in the insurance community. The additional time will help alleviate some risk from existing plans, however many companies still have a lot to do and cannot afford to press pause.
“Some insurers have been lobbying for this delay for a while, as the initial time frame was exceedingly tight. Others have been requesting clarification over certain aspects of the standard, without which it would have been difficult or prohibitively costly to move ahead.
Global insurers have been calling for a delay and improvements in the introduction of the International Financial Reporting Standard 17 (IFRS 17).
A global group of nine insurance associations had written a joint letter to Hans Hoogervorst, chair of the IASB, that highlighted the industry’s concerns about IFRS 17 rules for insurance contracts.
Extensive testing, together with insurers’ detailed implementation planning, had confirmed that a number of important issues still need to be resolved in order to ensure the quality and operational practicability of the new standard, the insurers had said. Topics to be addressed include impacts on measurement, operational complexity and implementation challenges.
The group had also agreed that a delay of two years is needed to allow for necessary improvements to be made to the standard and for adequate time for companies to tackle the significant implementation challenges of IFRS 17.
"The impact of the one-year delay can only be fully assessed after reviewing potential changes to the standard which the IASB Board will consider in December,” Bertolotti said.
“Our message to insurers would be not to stop - there’s so much to do. If you haven’t started, get a move on. To stand still is to fall behind,” he added.
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