The new International Financial Reporting Standard (IFRS 17) - Insurance contracts
20 January 2023
The long-awaited replacement of the International Financial Reporting Standard 4 (IFRS 4) adopted in 2004 began on January 1, 2023, with the establishment of the new IFRS 17 standard.
The new insurance contract standard marks changes in the insurance company sector. The current model provides a better understanding of the insurer's exposure risk. It also makes it easier for insurance companies to help interpret the financial position and performance of the insurer throughout the process.
The goal of introducing IFRS 17 is to create and implement a consistent accounting model for insurance contracts. Especially for companies operating on an international level. The purpose of the new system is greater transparency of information and improved quality of comparability at the level of financial reporting at the local and global levels. The changes include IT, accounting and actuarial departments near other business areas.
Cost-effectiveness and challenges
The application of IFRS 17 will undoubtedly be profitable, but there are also challenges, mainly financial. Challenges include developing internal and external systems for implementing models that require financial investments.