IFRS 17

In May 2017, the IASB announced a new financial reporting standard: IFRS 17.

The core of this new standard is the obligation to calculate the current value of insurance contracts. IFRS 17 provides measurement models that form the basis of the new valuation system (GMM, PAA and VFA). The contractual service margin, which reflects the unearned profit of a contract, is one of the major new concepts in IFRS 17.

Transition

The transition to IFRS 17 often starts with an assessment of existing valuation models and the capacity of current systems. To comply with IFRS 17, the systems might need some alterations, for instance to improve retrieving and processing historical data.

IFRS 17 does not only affect systems and processes. It also affects organizational culture, business operations, and communication standards. In the preparatory phase, a great deal of emphasis is placed on knowledge transfer and training. Interaction within multidisciplinary project teams of actuaries, financial experts and IT specialists is essential for the implementation phase.

Tangible benefits

IFRS 17 is intended for greater transparency and to enable insurers to make more unequivocal assessments. At the same time, IFRS 17 also benefits insurers themselves. The transition leads to the development of flexible systems and models. These will provide a constant flow of relevant information.

Implementation

The successful implementation of a new standard begins with an expert inventory. It is followed by concrete advice and a step-by-step plan. The Triple A specialists are ready to map out the most efficient route together with you.

Triple A offers solutions to:

• build fulfilment cashflow models that meet IFRS 17 requirements
• calculate risk adjustment for non-financial risks
• derive assumptions for interest rates (top-down or bottom-up approach)
• determine the level of aggregation
• support in choosing the transition method (full retrospective, modified retrospective, fair value)
• and much more!

Please contact us for more information.