Page 189 - India Insurance Report 2023- BIMTECH

India Insurance Report - Series II 177

The Introduction to IFRS 17 :

Heralding a positive impact on overall

financial stability

- Shrenik Baid
21 CA, IFRS 17 Leader, and Financial Services Partner
at Deloitte Haskins and Sells LLP

1. Background and outline

1.1. The Insurance landscapes

In May 2017, the International Accounting Standards Board (IASB) issued IFRS 17 Insurance
Contracts, effective from 1 January 2023, with its transition date as 1 January 2022, heralding a new era
of accounting for insurers. It took almost two decades to develop the IFRS 17 standard. The Standard
aligns itself with principles of other accounting standards and business processes and practices by
introducing actuarial concepts for accounting purposes.

In India, Insurers are expected to transition from Indian GAAP into Ind AS (standards similar to
IFRS). The implementation date is expected to be announced soon. Apart from onerous disclosures, two
standards – Ind AS 117 and Ind AS 109 are expected to have the most impact on Insurers. It is important
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to note that Ind AS 117 is applicable to insurance contracts, whether written by insurers or non-insurers.
The change from current accounting principles to Ind AS would bring in an organization-wide change,
which could have an impact on financials, actuarial models, product design and pricing, underwriting,
reinsurance contracts, treasury strategy, IT system, data, and processes, etc. To avoid trial and error, inter
alia, the diagnostic and design phase of the program will be the foundation for successful implementation.

The full impact of the Standard is still being unveiled and emerging. Our experience over the past
five years and our global survey of insurers highlight multiple learnings and challenges in technical
interpretations, modelling, resource availability, data quality to, data availability to data lineage, testing,
etc. Herein, selecting the right solution that can work on a sustained basis would be one of the key
decisions. Ind AS implementation would not only have a direct impact on financial reporting but also
on budgeting, planning and business scalability. Insurers will have to reevaluate their KPIs to reflect
upon the impact of IFRS 17 on the financial statements.

The granularity and breadth of information can provide distinct insights for businesses.