Insurers challenged to implement new accounting standards on time.
With the publication of IFRS 17 on 18 May 2017, the clock began ticking for insurers to start assessing the impact of the standard and to make it operational alongside IFRS 9. According to a new report, Navigating Change, from KPMG International, the vast majority of insurers are not far along in the process. Eighty five percent surveyed say they are still assessing the impact of IFRS 17 or in some cases have not yet begun their assessment, while 65 percent say they are in a similar early stage with respect to IFRS 9. Further, 36 percent say their companies have yet to start any IFRS 17 or IFRS 9 project.
During September and October 2017, we surveyed more than 80 insurance executives around the world to benchmark their readiness for IFRS 17 and IFRS 9 and examined how they are navigating change on the frontline. Respondents were drawn from 20 countries and include 15 of the 20 largest insurers in the Forbes 2017 Global 2000 that report using IFRS.
Resourcing is a key challenge that the report highlights. Twelve percent of respondents already have over 50 internal full time employees focused on the project, but 40 percent of firms have just 5 or fewer staff in place. Eight out of 10 respondents see securing enough people with the right skills as a significant hurdle. Moreover, six out of 10 respondents say they are finding securing the necessary budget a challenge.
According to Ferdia Byrne, Partner at KPMG in the UK, large UK firms are at a similar stage of implementation to their global peers, but there is a lot of work to be done and late starters will face a double challenge. Not only will they have more ground to make up, but also may find it harder to find the right people to do that work. Two-thirds of insurers told us they are keen to seize the opportunity IFRS compliance presents for business transformation. Leaving things until the last minute will not put firms in the best position to seize that opportunity.