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.
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.
Resourcing is a key challenge. 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.
The research, conducted between 26 September and 16 October 2017, surveyed 82 executives from insurers in 20 countries including 15 of the 20 largest insurance groups in the Forbes 2017 Global 2000 that report using IFRS.
Ferdia Byrne, Partner, KPMG UK, adds: “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.
“Brexit adds an additional complexity for the UK industry, which does not yet know whether it will be applying EU or UK endorsed IFRS in 2021. Despite this, the only sensible course of action is to plan for a 2021 implementation.”
“The new standards are complex with broad operational implications, so it is understandable that insurers are taking time to assess the requirements very carefully,” said Mary Trussell, Global Insurance Change Leader, KPMG International. “But unless companies get started, they could end up challenged to design and implement process and systems changes by 2021.”
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About the Navigating Change report
To develop a benchmark of approaches to the implementation of IFRS 17 and IFRS 9, a face to face and online survey of 82 executives from insurers around the world was conducted between 26 September and 16 October 2017. Fifty-two percent of responders are C-level executives. Sixty-two percent of responders work at Europe-based insurers, 28 percent are with ASPAC based companies, seven percent are headquartered in the Americas and two percent in Middle East and Africa. Plans are to repeat the survey in spring 2018 and regularly thereafter to follow insurers’ journey to implementation.
About KPMG International
KPMG is a global network of professional firms providing Audit, Tax and Advisory services. We operate in 152 countries and have more than 189,000 people working in member firms around the world. The independent member firms of the KPMG network are affiliated with KPMG International Cooperative ("KPMG International"), a Swiss entity. Each KPMG firm is a legally distinct and separate entity and describes itself as such.