Insurers have reported that there is still a huge amount of work to complete in order to successfully deliver IFRS 17 ahead of the 2023 deadline, said WTW recently.
According to WTW’s latest survey, entitled ‘IFRS 17: Will we make it?’, insurers report material progress has been made since WTW’s previous IFRS 17 poll in 2021.
However most survey participants also express ongoing delivery concerns resulting in the need to apply more shortcuts and simplifications in order to deliver on time, WTW noted.
The total cost faced by the global insurance industry to implement the accounting standard is now estimated by WTW to be US$18 billion to US$24 billion, survey report indicates.
This represents a substantial increase of 20% compared to the original estimate made by WTW in 2021, primarily to reflect companies realising more work is required than first envisaged, the firm said.
The next 12 months are critical for the industry to deliver related programmes on time, said Kamran Foroughi, Global IFRS 17 Advisory Leader at WTW.
“The survey results lay bare the true scale of the challenge that inevitably means pushing more work post the “go live” date in order to maximise delivery confidence for the programme,” he pointed out.
Key findings from the WTW study, which polled 270 insurers from 45 countries are as follows:
- Progress: Only 40% of the 26 large multinationals polled and 20% of the other 244 companies expect to deliver fully prepared programmes on time.
- People: More than 10,000 people will be required to deliver the accounting standard in the next two to three years. WTW forecast challenges in insurers’ recruitment and retention, both in programmes and related impacts elsewhere.
- Data, systems and processes: These are identified as top current concerns emerging from companies’ dry runs, requiring some of the greatest investment.
- Disclosure plans varied: While 14 of the 26 participating large multinationals are planning a 2022 investor update on IFRS 17, most other firms are not. Similarly, while some firms are required by local statute to publish Q1 2023 IFRS 17 accounts and a few larger insurers intend to voluntarily, most companies are not planning Q1 2023 accounts.
- Business-as-usual concerns: Most companies expect a significant increase in people required to run valuation processes under IFRS 17. Many have little appetite for this, however, so are increasingly turning to significant transformation and harmonisation across all metrics, including the use of automation to address this.