International Financial Reporting Standard (IFRS 17) – Insurance Contracts was issued in May 2017 and is effective for annual periods beginning on or after 1 January 2023 to enable insurance companies to get ready for its implementation.
IFRS 17 replaces IFRS 4, and to apply it, the recognition and measurement approach for insurance contracts should be identified during the validity term thereof.
What is the key objective of IFRS 17?
IFRS 17 is intended to provide more transparent quality information about insurance contracts to enable all stakeholders participating in the insurance industry and investors to make timely informed decisions.
What are the key differences between IFRS 4 and IFRS 17?
The following are key differences between IFRS 4 and IFRS 17:
What are the requirements for IFRS 17 implementation?
- Amending the accounting policies to reflect the selected approach for recognition and measurement of insurance contracts.
- Redesigning the chart of accounts (COA) to ensure representing the financial statements as per IFRST 17 requirements.
- Using an engine software for managing insurance contracts to enable the classification of insurance contracts in addition to calculating technical reserves and cash flows discounted over the term of insurance contracts.
What is the driving factor in IFRS 17 implementation? The accounting framework or the engine software?
The accounting framework is the driving factor and has significant influence in applying IFRS 17 as it provides the basis of recording and extracting the information used in managing insurance contracts and preparing the financial statements. On the other hand, the engine software is an ancillary tool that ensures having accurate records and calculations.
What are the accounting knowledge challenges for IFRS 17 implementation?
Accounting knowledge is a crucial challenge for insurance companies in terms of obtaining an understanding of the IFRS 17 requirements from an accounting perspective that will be reflected on designing a COA aligned with the Standard requirements.
Since this standard has been recently applied, the financial departments in the insurance industry might face a challenging understanding of the requirements and application of the Standard.
How insurance companies handled the challenging rare knowledge of IFRS 17 implementation from an accounting perspective?
Majority of local, regional, and global insurance companies, especially companies listed on the stock exchanges, engage the services of international accounting firms for consulting services to design a COA in line with the requirements of this Standard so that they become in alignment with the IFRS 17 requirements.
Does Baker Tilly have a team specialized in IFRS 17 implementation from an accounting perspective?
YES, Baker Tilly has a professionally specialized and qualified team with expertise in the IFRS 17 applications to enable insurance companies comply with the applicable requirements in the State of Kuwait.
What is the added value to insurance companies from engaging Accounting Consulting for IFRS 17 Implementation?
- Ensure accurate and flawless implementation of IFRS 17 from accounting perspective.
- Ensure protecting the financial position of insurance companies and continuity of their business.
- Increase the stakeholders’ confidence in the company and enhance its reputation.
What are the services provided by Baker Tilly?
Accounting consulting for IFRS 17 Implementation, including modification of the chart of accounts, the presentation method of financial statements and related disclosures, and the accounting policies and procedures.