2023 is a very important year for the insurance industry: The complex set of rules IFRS 17 will come into force on January 1, 2023, replacing the interim standard IFRS 4 Phase I, which has been in force since 2005. The new standard governs the principles of identification, recognition, measurement, presentation and disclosures for insurance contracts.

Alma will support the implementation of IFRS 17 in the insurance industry. Therefore, Alma will publish short and easy-to-understand articles on IFRS 17 from time to time.

Part 1: History of IFRS 17

It’s been a long road…
After more than 20 years of project work, the time had come: On May 18, 2017, the IASB (International Accounting Standard Board) published the new international accounting standard for insurance contracts, IFRS 17.

But that was not the end of the story. As is common with other newly developed IFRSs, a Transition Resource Group (TRG), a public forum for representatives of the insurance industry, has been established to discuss outstanding issues regarding the implementation of IFRS 17. TRG’s concerns and the resulting proposed amendments prompted the IASB to postpone the implementation date and give entities more time. Based on the TRG’s proposals, the IASB published the “Amendments to IFRS 17” on June 25, 2020. As a result, the acquisition date has now been postponed to January 1, 2023.

The next hurdle was the implementation of the new standard in EU law (so-called endorsement). As part of this process, the European Financial Reporting Advisory Group (EFRAG) issued an endorsement recommendation on March 31, 2021 following an appropriate stakeholder consultation. As a result, the Accounting Regulatory Committee (ARC) voted in favor of the endorsement on July 16, 2021. The European Commission has now followed EFRAG’s endorsement recommendation and adopted a temporary exemption for the formation of annual cohorts.