An effective date of the new IFRS insurance standard for reporting periods beginning either on or after 1 January 2018 is most likely, assuming the potential publication of a final standard in early to mid-2015. The FASB has yet to decide on a timeframe for effectiveness after their standard is finalized.
The things you need to know:
- For insurers that are currently addressing the challenges of Solvency II, taken together with the proposals, there are opportunities for synergies in areas such as modeling capability and investment in systems.
- Many in the insurance sector would like to see the effective date of the proposed insurance standards and financial instruments standards align because a misalignment has the potential to require two major programs of change.
- Insurers will need time for implementation. The timeline (see publication) includes time for insurers to run systems and refine numbers under their existing GAAP and the proposals in parallel, i.e. dual running, so that they can understand the impact of the changes on their business.
We believe that many may have reached the stage where incremental change provides diminishing returns and opportunities for broader operational enhancement around data, systems, models, processes and people are increasingly being evaluated. The new accounting standard introduces another level of complexity, which will soon need to be incorporated within these programs.