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Screenshot of a breaking news alert e-mail from Q2 2017
On 18 May, the International Accounting Standards Board (IASB) issued International Financial Reporting Standards (IFRS) 17, setting out a single, consistent approach to the accounting for insurance contracts.
The Financial Stability Board (FSB) welcomed the final publication of this standard, which was identified as a high priority at the FSB Plenary meeting of 25 September 2015.
Subject to the relevant endorsement or adoption procedures in IFRS jurisdictions, the standard will become effective on 1 January 2021, which provides enough time for insurers to adapt processes, systems and organisational structures.
Nevertheless, the FSB encourages firms to start the implementation efforts as soon as possible, and to engage in open dialogue with the IASB on the ways in which the standard’s application can generate the most relevant information. Insurance regulators should be part of this dialogue, and may consider how best to support consistent and practical application of the standard.
Enhanced dialogue with auditors and market authorities during the implementation stage will also be important. Investors need certainty around the degree of reliance they can attach to estimates of insurance contract liabilities. Relevant disclosures from reporting entities should aid in the understanding of the methodologies and assumptions used in developing those estimates.