Adoption of IFRS 17 in Emerging and Frontier Insurance Markets. An Actuarial Perspective

Adoption of IFRS 17 in Emerging and Frontier Insurance Markets. An Actuarial Perspective

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The new rules set forth by IFRS 17 not only imply a fundamental overhaul of insurance accounting, but also, the reengineering of actuarial and accounting processes within an insurance company. In fact, a few insurers will opt to transform their operating model in its entirety, while smaller ones will set their objectives at minimal compliance. The objectives of the standard are to increase comparability between insurance companies and between insurance and other parts of the financial industry, such as banks and asset management. Other benefits include an increased consistency across companies in accounting for insurance contracts and a more theoretically valid measurement of revenue. These lofty goals come at a cost: the implementation carries a host of challenges that may result in many cases in the restructuring of an insurer’s operating model. Non-advanced insurance markets are coping with a myriad of adaptations to their modus operandi, including overhauls of the IT infrastructure, redefinition of roles and functions, and understanding the financial impact of the standard. In this paper, the author explores how insurers from emerging and frontier insurance markets, can navigate through the technical aspects of the standard, and implement the IFRS 17 framework. There is an enormous gulf between emerging and advance insurance markets, but actuaries can contribute to narrowing the gap.

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