Regulatory: IFRS 17 Consulting Services | FTI Consulting

Regulatory: IFRS 17 Consulting Services

Insurance | Forensic & Litigation Consulting

October 15, 2018

IFRS 17, effective January 1, 2021, will have a profound impact on global Life, Health and P&C insurers and reinsurers. The standard will impact the entire enterprise, will change business models, and will be more complex, costly and burdensome than previous standards. Prudent boards and executives of affected companies will therefore ensure that a transition program is implemented as soon as possible.

Intent of IFRS 17

IFRS 17 is intended to achieve greater transparency within the insurance and reinsurance industries by: providing updated information about the obligations, risks and performance in insurance contracts; increasing transparency in financial information reported by reinsurance and insurance companies; enabling investors and analysts to increase their understanding and confidence; and introducing a consistent accounting for insurance contracts based on a current measurement model.

Key IFRS 17 Requirements

Granularity of Reporting: IFRS 17 sets requirements on the level of granularity measurement at which principles and recognition should be applied. Portfolio is Level-1, defined as a group of contracts with similar risks that are managed together. Level-2 is grouped according to profitability: onerous; no significant risk of becoming onerous; and remaining contracts, depending on the expected profitability at inception. Level-3 are cohorts according to contract inception date, as the new standards prohibit the grouping of contracts issued more than one year apart.

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