Six months ago, the IASB issued IFRS 17 Insurance Contracts. This new IFRS Standard replaces the requirements for accounting for insurance contracts in IFRS 4 Insurance Contracts from 1 January 2021.
IFRS 17 introduces fundamental changes to existing insurance accounting practices for some companies. Investors and analysts will need to factor these changes into their analyses. Although many investors and analysts were consulted during the development of the new Standard, it is important that they become familiar with IFRS 17 now that it has been finalised. For that reason, we will continue to invest considerable resources into meeting and educating investors and other users of financial statements.
The initial investor reactions to IFRS 17 were collated by technical staff and shared with the IASB at the July 2017 Board meeting. Most investors and analysts the IASB spoke to welcome the improvements in transparency and comparability introduced by IFRS 17. They believe that IFRS 17 will improve financial reporting for insurers, particularly in explaining the source of profits for long-term insurance contracts. Here are the top five questions from investors and analysts so far and the IASB answers:
1. Will IFRS 17 affect dividend payouts?
2. How can a principle-based Standard like IFRS 17 improve comparability between insurers?
3. Will IFRS 17 bring global comparability to the insurance sector?
4. What are the main differences between IFRS 17, regulatory reporting and embedded value reporting?
5. How will removing insurance premiums from the income statement improve comparability?
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