Baker Tilly
Contact us
Sun reflecting off of colorful building

IFRS 17 Insurance Contracts

Assisting organizations with one of the most significant changes insurers have faced in the last several years, through in-depth knowledge and experience at a local, regional and global level

IFRS 17 Insurance Contracts

IFRS 17 is a complex accounting change affecting many insurance organizations who will need help understanding how they need to adapt their reporting to comply with the updated requirements. Our insurance specialists can help.

    What is IFRS 17?

    IFRS 17, effective on Jan. 1, 2023, standardizes insurance accounting at a global level to improve comparability, increase transparency and provide the information required to assess the impact of insurance contracts on the insurer’s financial position, financial performance, cash flows and risk exposure. This standard not only affects the profit, equity, insurance liabilities and financial reports of insurers, but also their information technology (IT) models and structures.

    The standard applies to companies who have:

    • Insurance contracts, including re-insurance contracts issued
    • Re-insurance contracts maintained by the company
    • Investment contracts with voluntary participation feature, provided that the insurer also issues insurance contracts

    Baker Tilly assists insurers in applying the standard

    With our global reach, Baker Tilly is able to assist insurers in applying the standard through an integrated technical and timely framework to fulfill the standard requirements. Baker Tilly can assist management in the following activities:

    • Implementation roadmap: develop a detailed roadmap for IFRS 17 transformation including communication plan and stakeholder map
    • Governance and oversight: provide recommendations for project governance and oversight, tracking of implementation and transition project plan milestones and key priorities at both the Group level and local subsidiary/branch level.
    • Steering Committee: participate on IFRS 17 Steering Committees including dashboard monitoring of key milestones and status read-outs.
    • Training: includes training of finance, accounting and actuarial staff as well as management and other users of the IFRS compliant financial statements as well. Such training would include overview and more detailed training of IFRS 17 subtopics and would be tailored based on the needs of the users.
    • Scoping: assist with local management for each county in which company has operations to help determine the scope of IFRS 17
    • Measurement model evaluation: assist management in the determination of which model valuation approach is appropriate based on the underlying nature of the insurance offerings such as Premium Allocation Approach (PAA) versus Building Blocks Approach (BBA), applies for each significant insurance contract.
    • Accounting policy changes: assist management with the development/review of white papers related to critical implementation decisions and accounting policy choices, transition options, interpretations, estimates and other key judgments associated with implementation.
    • Internal controls and process changes: design and implementation of IFRS 17 process related changes including:
      – Updating closing and reporting processes, actuarial processes and risk management
      – Reassessment of internal controls over data, assumption changes and other inputs, monitoring controls, control considerations relating to temporary transition solutions, and group considerations
      – Planning, budgeting and forecasting processes
    • Organizational design: recommend organizational design changes (changes to roles and responsibilities, in particular between the Actuarial and Finance functions) as a result of new requirements
    • Technology assessment: assess technology needs and changes, including technology approach, vendor selection and data considerations
    • Data requirements: advise on optimal systems to meet new modelling and data requirements
    • Key performance indicators (KPIs): identify changes to management information and KPIs used to communicate business and financial performance to internal and external stakeholders, during both the transition phase and after implementation
    • Actuarial expertise: act as a sounding board for the actuarial staff to determine if their methodology (discount rate, risk adjustment, contractual service margin, etc.) is reasonable. A key component of adoption of IFRS 17 is the actuarial analysis needed to support both the PAA and BBA and also to determine if insurance contracts meet the “onerous” test for day one loss recognition as well as other actuarial analyses.
    • Valuation model assessment: assist with the development of projection/valuation models and tools, model testing and documentation and various data validations
    • Disclosures: assist with applicable financial reporting disclosures including development of both the financial statements format as well the additional accounting policy and other disclosures required
    • Communications with stakeholders: assist with assessing the impact on and communication with key stakeholders, including the chief financial officer, internal audit, investors and analysts and supervisory bodies and regulators
    To learn more about IFRS 17 and how Baker Tilly can help, contact our team today.

    Why Baker Tilly?

    Connect with our teamarrowCreated with Sketch.

    The Baker Tilly difference is that each team member brings value, industry insights and perspectives to work closely with you to move your objectives forward. Our clients receive support from engagement teams combining technical, industry and customer-facing experiences, allowing us to address questions and concerns directly, as well as draw on knowledge of leading best practices and direct applications by peers. We offer specialization in several key areas:

    • Local, national and international presence
    • Software and technology knowledge
    • Benchmarking of leading practices and peer insights
    • Broad and deep knowledge of global insurance clients
    • Superior insurance and actuarial knowledge