In this third article of our four-part series, we report on the views from the participants in the 2022 Global IFRS 17 Insurance Survey on how they will use the new IFRS 17 financial language to communicate to investors. With the focus on building sub-ledgers, introducing new charts of accounts, preparing data, and updating actuarial models, it is also sometimes easy with IFRS 17 to lose sight of the numbers themselves, and the story they tell about the performance of the underlying business.
Yet, IFRS 17 is fundamentally different and therefore difficult to compare against IFRS 4, the previous standard for insurance accounting, which was designed as a mere interim solution. “The numbers” are much more than just a new balance sheet and P&L with additional, detailed disclosures. The survey shows that two aspects really stand out in terms of understanding the new world of IFRS 17:
- The mixture of economic measurement and the smoothed release of profits over a policy’s lifetime and
- The ongoing resetting each period of the insurance revenue to expected claims and expenses that could make the comparison of revenue and profit margins between lines of business more direct and understandable.
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