SAP FPSL, the comprehensive solution for IFRS17 compliance
By Rubén Martín González
Currently, the insurance and reinsurance sector is faced with a situation where different accounting criteria are applied between different countries or jurisdictions. This lack of standardisation in accounting regulations makes it very difficult to compare companies, both in the same sector and at an international level.
The implementation of IFRS 17 aims to put an end to this problem by proposing a general framework to eliminate inconsistencies, harmonise accounting and facilitate the comparison of financial statements between insurance companies and companies in other sectors.
From January 1, 2023, IFRS 17 replaces IFRS 4, the provisional standard issued by the IASB in 2004. During 2022 the two standards will coexist in parallel to comply with the comparative period, until IFRS 17 is definitively and exclusively applied.
Companies subject to its implementation know the hard work they will have to do and the time this implementation may take in the areas of IT, actuarial, accounting and risk. Therefore, they should take advantage of the remaining time to start its implementation and avoid possible sanctions from the control entities.
The main challenge for the industry is that IFRS17 is not just another adjustment, it is a milestone. Among the most representative accounting changes are the reclassification of items on the balance sheet and the recalculation of revenue accounting for all contracts, both new and old, as well as changes to IT platforms and company strategy.
IFRS 17 is not only a financial, actuarial or risk project. It is the opportunity for insurers to transform their operations to the digital requirements of the modern era by integrating people, processes and technologies in order to streamline market dynamics, insurance assessment and industry comparability.