The new financial reporting standard, IFRS 17, which will officially come into force in January 1 2022, in more than 100 countries around the world, represents the fundamental change to insurance accounting requirements.
Moreover, it will involve a new set of actuarial and financial calculations. Specifically, IFRS 17 will change the way that insurers measure and report their topics, requiring them to value insurance contracts based on current fulfillment value and not only the book value, said Chamarie Ekanayake, Director Supervision of Insurance Regulatory Commission of Sri Lanka.
“IFRS 17 may be an accounting standard led and managed by the finance functions, but it will also require insurers to demonstrate more controls, connected processes for creating key IFRS matrix,” she told the inauguration of 2nd South Asian Actuarial Conference (SAAC), held in Colombo this week.
She said further that, by bringing actuarial models and calculations into the heart of financial reporting, IFRS 17 will introduce complexities that fundamentally challenge existing insurance operations, demanding new solutions and greater connectivity and collaboration between the actuarial and finance functions. “In other words, IFRS 17 will come as something of a shock to the system.
Therefore, we need a system that will connect the production of IFRS 17 into numbers that will rely on actuarial systems to perform calculations and report results and data.
IFRS 17 will create additional reporting requirements for all insurers. Above all, risk management systems too can’t be installed overnight.
In addition, actuarial solutions will help deliver constant business values across the whole spectrum of actuarial and risk analysis, from product pricing, reserves and valuations through anti- money laundering and capital projection to drive multiyear business plans.
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