The implementation of the International Financial Reporting Standard (IFRS) 17 has been a long-awaited change in the way insurance companies are required to report their financial information. Published in May 2017 with an effective date of January 1st 2023, the new standard has been designed to provide more transparency and predictability in the way insurers report their financial results, and to create a more consistent global approach to financial reporting.
“As an analyst, the actuarial world is fascinating to me. I like numbers. I like math. But what IFRS 17 has done has changed the insurance landscape locally, again. Trinidad and Tobago insurers have just recently settled with the Insurance Act of 2018, which took years to get proclaimed into law. We now must go back to the drawing board as companies apply the IFRS 17 which makes the insurer take into account, not just what exists today, but what will exist in the future,” says Mackenzie. “It’s going to be a pain whenever these new standards come along. Understanding these new regulations will be critical; How do I apply this? And how is this going to impact my business?”
One of the most significant issues has been the amount of information required to be included in the financial reports. This has resulted in a significant increase in the amount of data that is needed for the financial statements, which has created difficulties for insurers in terms of both data collection and analysis.
Is the IFRS 17 relevant to smaller companies in Trinidad and Tobago and how do we apply these standards locally? questions Mackenzie. “These are standards that are designed in much bigger rooms than the ones that we sit in within to confines of Trinidad and Tobago, and therefore further dialogue is needed between the finance and audit professionals to adapt and ensure businesses are compliant at the end of the day.”
Mackenzie indicated that regulators are committed and have already met with a large portion of the insurance companies in the country. An open communication channel was established to assist insurers with information, manage expectations, and set expectations in certain instances. With that goal in mind, it is all about getting everybody compliant with both, the insurance regulations, and the new IFRS regulations.
When we speak of insurance, the first things that may come to mind is your psychical assets; Property, Motor. All under the umbrella of General Insurance. But where IFRS17 will be most impactful will be under the arm of Life Insurance. While IFRS 17 is relatively complex and requires companies to make a number of assumptions when calculating the market values of their pension liabilities and assets, it is an important accounting standard that improves the accuracy and transparency of these pension liabilities and assets. However, it also presents some potential drawbacks for companies, including increased costs and complexity, and volatility in the market values used to calculate pension liabilities and assets which will challenge the comparability of financial information.
To learn more about IFRS 17 – visit here