Deloitte Middle East held an awareness session on IFRS 17 – Insurance Contracts in Dubai in December 2017. This session was hosted by Deloitte’s IFRS 17 leaders who have been actively involved in developing Deloitte’s response to the accounting standard, together with Deloitte’s Global team. The event was attended by regulators and business leaders representing leading insurance companies in the Middle East.
The International Accounting Standards Board (IASB) has published IFRS 17 on May 18, 2017 after years of deliberations. IFRS 17 supersedes IFRS 4 – Insurance Contracts and related interpretations, and is effective for periods beginning on or after January 1, 2021, with earlier adoption permitted if both IFRS 15 – Revenue from Contracts with Customers and IFRS 9 – Financial instruments have also been applied.
Samir Madbak, Deloitte Middle East Insurance Industry Leader said: “Deloitte expects that implementing the new IFRS 17 requirements will entail major changes to insurance companies’ actuarial and finance reporting processes, operating model, systems and data. This effort will likely generate implementation costs which are expected to be higher for life insurers than general insurers. The long-term coverage underpinning life insurance policies, together with the more common presence of options and guarantees in these policies, will require a much more granular set of accounting and actuarial data.”
“There will be drastic changes in the presentation of financial performance of insurance companies, which currently focuses on the gross written premium at large. The new reported profit approach considers amongst others items, the effects of contractual service margin, risk adjustment, economic and non-economic variances etc. which are relatively new terms”.
“The transition requirements, although simplified substantially late in the project, remain to be one of the most challenging aspects of the Standard, particularly for insurers with outstanding contract liabilities originated long before the date of transition,” concluded Sunder Nurani, Audit Partner, Deloitte Middle East