IFRS 17 has been developed by the International Accounting Standards Board (IASB) and needs to be endorsed by European legislators in order to come into effect in the EU. EFRAG's advice to the legislators on endorsement will play an important role in that process.
The draft represents the consensus view of the European insurance industry which supports the high-quality reporting standards and has put significant effort into ensuring that IFRS 17 adequately captures the key elements of the insurance business model that allow insurers to provide protection and investment products that benefit both customers and wider society.
"We support the endorsement of IFRS 17 in the European Union, provided that there is an adequate solution to the issue of 'annual cohorts' as part of the endorsement process. Such a solution should be optional and should not impact the 1 January 2023 effective date of IFRS 17".
While Europe's insurers welcome the improvements made by the IASB in the final version of IFRS 17, the standard still contains a number of unresolved issues, but it should not impact the endorsement process and should not lead to amendments to IFRS 17.
The issue of annual cohorts remains a fundamental concern for insurers because the current requirements will not adequately reflect the true economic nature of insurance products which are cashflow matched or that involve risk sharing between customers and over time. Failure to address this issue will risk undermining such products, reduce the usefulness of the reporting information and increase costs.
European insurers therefore support endorsement of IFRS 17 if an appropriate solution is incorporated in Europe for annual cohorts. This solution can and must be designed to avoid any change to the 1 January 2023 effective date and allow those who want to apply the full IFRS to do so.
Source: Insurance Europe
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