Staff at the International Accounting Standards Board (IASB) have recommended delaying the effective date of the IFRS 17 insurance contracts accounting standard to 1 January 2023.
The proposed date is 12 months later than suggested by the IASB in its draft amendments last year, and two years after the 1 January 2021 date originally proposed in the standard.
Any delay to IFRS 17 would also allow insurers to postpone implementing the IFRS 9 standard for financial instruments.
The staff’s advice shows one main consideration is around the time available for implementation, particularly for smaller insurers. The staff did consider a later date for smaller insurers, as the US standard-setter did with its long-duration contract targeted improvements, but decided that it was unfeasible to identify smaller insurers given the variations in local markets.
The recommendation will have to be ratified at the next meeting of the IASB, scheduled for 17 March.
The board tends to follow staff recommendations, but the implementation date has been hotly contested, with insurers lobbying for both 2022 and 2023 as suitable dates.
One of the most influential bodies, the EU’s European Financial Reporting Advisory Group, also favoured 2023.
Ralph Ovsec, senior director in Willis Towers Watson’s insurance consulting and technology division, said: “We believe this proposal by the IASB staff was considered after discussion with the IASB members, and we therefore believe that the IASB will accept this proposal.”
“We also believe this will address the implementation challenges faced by insurers, and we believe companies should continue to press forward at current pace and use this additional time to strengthen their processes and procedures.”
Several insurers at InsuranceERM’s IFRS 17 Conference last month suggested they would keep the momentum in their implementation projects if there was a delay to 2023, and use the extra year to better understand the transition between the accounting regimes. But they would not adopt the standard early.