Insurance accounting change has been a hot topic for over 20 years. The epic journey is now reaching a milestone with the International Accounting Standards Board (IASB) forthcoming insurance contract standard expected to become a reality in early 2017.
The changes from the IASB's Insurance Contracts and Financial Instruments standards are likely to be wide-ranging and intricate, impacting all areas of an insurer's business including, accounting, actuarial, tax and reporting; data systems and processes; business management, such as appraising new products, designing distribution arrangements, evaluating M&A opportunities, buying reinsurance and/or managing invested assets. And, perhaps most importantly for a successful transition, insurers will need to consider how the changes will impact their people.
Our experience shows us that there are many factors that will contribute to successful implementation, including:
In speaking with many of our clients around the world, we hear their concerns, but we also hear an industry getting ready for the epic journey to come.
“One thing that we were doing now is thinking about what the forthcoming standard will mean for the design of the products we are selling and those that are in development. Also, we are looking to understand how they might be affected and what we need to write into contracts now to future-proof them once the standard is finalized.” Graham Duff, Head of Business Partnering Insurance, AMP
“Continuous change has become second nature in the insurance industry. It requires a different way of working – being very clear about the changes required and about peoples’ roles and responsibilities in order to make those changes happen.” Sandor Knol, Head of Finance and Actuarial, AEGON
IFRS insurance contracts standard will have far reaching impacts for life and P&C insurers and reinsurers.