Insurers need to gear up for the upcoming International Financial Reporting Standards (IFRS) 17 on Insurance Contracts, says professional services firm Grant Thornton Abdulaal (Bahrain).
They will have more time to prepare for implementation of the standard as the International Accounting Standards Board (IASB) earlier this week announced that the effective date of the implementation will be deferred to annual reporting periods beginning on or after 1 January 2023. The new deadline represents a one-year delay to the previously proposed date that itself was deferred from January 2021.
Grant Thornton Bahrain says that Middle East insurers have begun the first phase of impact assessment. Regulators across the region have issued directives to submit the first-hand impact assessment and project plan for other phases to comply fully with IFRS 17.
The main aim of IFRS 17 is to standardise insurance accounting to ensure that users of IFRS financial statements are able to compare their financial results with those of other insurance companies. Among other things, under IFRS 17, the calculation methods for the measurement of contract liabilities and insurance revenue are revised. Both now incorporate the time value of money, which will have a greater bearing on long tail insurance contracts as opposed to short tail.
Source Middle East Insurance Review
