Insurers may need to take a bigger leap amidst new standard – WTW

Insurers surveyed indicated three primary challenges.

According to a survey conducted by Willis Towers Watson (WTW) , insurers have identified significant challenges following the reporting of their half-year 2023 results under IFRS 17 for the first time. 

While progress has been made, participants in the survey emphasize that there is still much work to be done post-implementation.

As the new standard transitions into production, insurers face three primary challenges: data management, availability of skilled resources, and systems/technology.

Only 55% of 2023 reporters feel "very confident" in explaining IFRS 17 results in simple scenarios to senior management or investors. This confidence drops significantly to 18% and 9% when explaining complex and extreme scenarios, respectively. More than half of 2023 reporters are unprepared to perform business planning and P&L projections based on IFRS 17/9.

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Nearly 70% of 2023 reporters anticipate an extended working-day timetable (WDT). Insurers recognize the need for substantial efforts to integrate IFRS 17 into routine reporting. 

This involves reducing the WDT, making significant system and process improvements, and enhancing the analysis and understanding of IFRS 17 results.

Almost all 2023 survey participants reported that their capacity to pay dividends remained unaffected by IFRS 17.

Furthermore, the global insurance industry is estimated to face a total implementation cost of $21b to $27b for the IFRS 17 accounting standard.

This represents a 15% increase compared to the previous assessment made in 2022. For the largest multinationals, average cumulative program costs are projected to be $240m each, while the remaining insurers are estimated to incur $30m each.

The survey encompassed 235 insurers from 37 countries/markets, with 160 (68%) reporting under IFRS 17 for the first time in 2023.