Insurers say data is one of the challenges they’re facing in the transition to the new reporting standard known as IFRS 17 (International Financial Reporting Standard 2017).
IFRS 17 replaced IFRS 4 and set out principles for the recognition, measurement, presentation and disclosure of insurance contracts starting January this year.
It provides transparent reporting about a company’s financial position and risk. It also removes inconsistencies and enables investors, analysts and others to meaningfully compare companies, contracts and industries.
“Data has been the biggest issue because you have to go back and review as if IFRS 17 was there from the beginning and apply,” said Moses Kangéthe, the Chief Financial Officer at Britam Life Assurance.
“Going back to when you issued your first contract and applying IFRS 17 is not an easy task, systems have changed and the standard provides that you can’t apply the benefit of hindsight.”
He added that IFRS 17 gives insurers the option of going back as far back as possible based on the information and the systems in place.
“If your system can go back 10 years or five years, it is allowed so you make assumptions for the historical ones,” he said.
Unlike IFRS 4, the new standards apply to the whole contract (with limited exceptions) and have detailed measurement requirements.
“An entity shall estimate the probabilities and amounts of future payments under existing contracts based on information, including historical data about the entity’s own experience, supplemented when necessary with historical data from other sources...” reads guidelines on the standard.
