Andrew Warren
17 October 2017 | 13:15 – 14:15 | Ballroom 1
Relevant practice area(s):Life Insurance
Suggested audience knowledge level: Intermediate
Abstract:
The accounting reporting standard IFRS 17 – Insurance Contracts was launched in May this year after almost 20 years in development. The implications on the changes to determining the liabilities and provisions for insurance contracts, and the resulting income statement, have been the main areas of discussion during this period. Obtaining a financial reporting framework that creates a level of consistency between insurers, both “long-term” and “short-term” (to use the South African legal definitions), as well as consistency with non-insurance operations has been the key focus.
Now that the standard has been finalised, and the “rules” for determining the liabilities for insurance contracts set, the importance of the broader business implications of the standard now come to the fore. Under IFRS 4 the actuarial process can easily be separated from the finance process, with the required “change to the life fund/change in actuarial liabilities” (or some similar terminology) posted to the accounting general ledger, and the data, systems and process audit of these running (to some degree) in isolation of the financial audit. Under IFRS 17, the statement of comprehensive income is, at a conceptual level, the same as an analysis of surplus. Also, the Contractual Service Margin (CSM) behaves, once calculated at recognition, like a retrospective reserve, with both accounting and actuarial attributes.
Under IFRS 17, the financial reporting process, of which the actuarial projection and discounting process is one element, will be a combined actuarial and finance competence. Data, systems,
process and people will need to be integrated, and for the actuaries working in financial reporting, a greater understanding of the end-to-end financial reporting process is needed.
In this session, we will hold a panel discussion with an insurance auditor, an insurance systems expert and a data process expert to discuss case studies and experience from a similar environment, IFRS 9 Financial Instruments, and bring a wider view of the work needed to be done by actuaries in life and short-term insurers to enable their employers and clients to be IFRS 17-compliant by 2021.