A group of 11 international insurance associations have backed growing calls for a two-year delay to the implementation of IFRS 17, the insurance accounting standard.
While welcoming the International Accounting Standards Board’s (IASB) recent decision in November to delay the implementation of IFRS 17 for one year to 1 January 2022, the insurance bodies say one year is insufficient to implement the standard properly.
The group of 11 have therefore written a joint letter to IASB chair Hans Hoogervorst urging a two-year delay to IFRS 17.
The accounting standard for insurance contracts was originally scheduled to take effect in January 2021, but there were widespread calls by trade bodies around the world to delay the standard for two years because the deadline was seen as too challenging.
The most high-profile call came from a group nine insurance trade bodies. Led by Insurance Europe, the group called for a two-year delay in October.
The letter from the 11 insurance associations features nine organisations that were the signatories to the October letter, plus the US National Association of Mutual Insurance Companies (Namic) and the South African Insurance Association.
“We continue to be of a strong view that a two-year deferral is required to both fix the problems with IFRS 17 and to give insurers enough time to have a successful global implementation of the standard,” said the latest letter.
Given that IFRS 17 does not normally apply to mutual insurers, InsuranceERM asked Namic – one of the 11 signatories - why the standard is affecting its members.
Jonathan Rodgers, financial regulatory manager at Namic, said: “There are many reasons why Namic members are concerned with the new IFRS 17 standard. Chief among those concerns are the cost and complexity to implement the standard. Namic has members who are required to file IFRS financial statements, US GAAP financial statements, and US statutory accounting financial statements.
“The differences between IFRS and US GAAP are significant and many implementation issues with IFRS 17 remain unresolved. In addition to implementation concerns, Namic members are mindful of the fact that standards being developed by the International Association of Insurance Supervisors are heavily influenced by IFRS accounting standards.”
The call from the 11 associations comes at a time when the IASB is considering potential amendments to IFRS 17.
In its October board meeting, the IASB picked up 25 issues that could be subject to change, and agreed on the criteria to be used to assess whether any changes should be made.
The latest December letter continued: “It is important that the IASB take the time necessary to consider potential amendments to the standard. In addition, the significant operational concerns raised by the industry, which were supported by detailed, fact-based industry analysis should be taken into account.”
Yesterday the Accounting Standards Advisory Forum, an advisory group to the IASB, gave its views on six of the issues, but the IASB stressed that it would continue to discuss whether the remaining issues merit amendments in future meetings. The IASB’s next meeting will take place on 11-13 December.
InsuranceERM has contacted the IASB for comment.
The signatories to the letter were Insurance Europe; Association for Savings and Investment South Africa and the South African Insurance Association; General Insurance Association of Korea and the Korea Life Insurance Association; the Insurance Bureau of Canada and the Canadian Life & Health Insurance Association; Insurance Council of Australia; Insurance Council of New Zealand and Financial Service Council of New Zealand; and the National Association of Mutual Insurance Companies.
InsuranceERM is hosting an IFRS 17 conference in February 2019. For more information see https://www.insuranceerm.com/content/events/ifrs-17-conference.html