In a global survey conducted by WTW, insurers have voiced their concerns after reporting their half-year 2023 results under IFRS 17 for the first time. This study encompassed 235 insurers across 37 markets, with a substantial 68% of them reporting under IFRS 17 for the first time this year.
The report’s key insights shed light on the substantial hurdles insurers still face post-implementation. While there has been notable progress, participants highlight that significant work remains. Among the major challenges are data management, the availability of skilled resources, and the need for advanced systems and technology to comply with IFRS 17.
Surprisingly, only 55% of the insurers who reported in 2023 expressed “very confident” when explaining simple scenario results of IFRS 17 to senior management or investors. Confidence plummeted to 18% for complex scenarios and a mere 9% for extreme ones. Moreover, over half of the reporters admitted their lack of preparedness for business planning and P&L projections based on IFRS 17/9.
Looking ahead, nearly 70% of the insurers anticipate a longer working-day timetable (WDT), underscoring the considerable effort required to integrate IFRS 17 seamlessly into their reporting processes. This includes streamlining the WDT, implementing critical system and process improvements, and enhancing their analysis and understanding of IFRS 17 results.
Despite these challenges, almost all survey participants confirmed that their capacity to pay dividends remained unaffected by IFRS 17.
However, the financial burden of implementing IFRS 17 continues to rise. The estimated total cost for the global insurance industry now stands between US$21 billion to US$27 billion, marking a substantial 15% increase from the 2022 assessment. Large multinationals, in particular, are expected to shoulder an average cumulative program cost of US$240 million each, while the remaining insurers will bear US$30 million each.
In light of these challenges and expenses, strategic and targeted investments are essential for insurers to maximize the benefits of IFRS 17 and transition it into standard business practice, as emphasized by Kamran Foroughi, WTW’s global IFRS 17 advisory leader.
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Comparing these findings to last year’s report, the insurance industry’s readiness for IFRS 17 remains a work in progress. In 2022, only 40% of large multinationals and a mere 20% of other companies anticipated delivering fully prepared IFRS 17 programs on time.