IFRS 17 Insurance Contracts went into effect globally on 1 January 2023. Many insurers and analysts have hailed IFRS 17 as a positive change in the accounting industry, saying it offers better comparability than IFRS 4. In Indonesia, IFRS 17 was adopted as PSAK 74 and will go into effect on 1 January 2025. The two-year gap between the adoptions of IFRS 17 and PSAK 74 will enable insurers in Indonesia to leverage the experience of the global community when implementing IFRS 17.
KPMG Indonesia’s Board Governance Forum (BGF) hosted a breakfast briefing session on Wednesday, 1 November 2023 at the KPMG Clubhouse. Hengcky Winarno - Risk Consulting Partner, and Susiyani Setyowati - Risk Consulting Director, started the session by warmly welcoming members of the board and audit committees, and senior management from the insurance sector. Our Insurance Practice Leader, Susanto, shared the recent KPMG Global Survey Report on insurers’ half year reporting under IFRS 17 and IFRS 9 and the first year audits under PSAK 74. At the end of the interactive session, our BGF Partner-in-Charge, Harry Widjaja, wrapped up the session with some key takeaways as follows:
- Start your discussions on insurance reporting as early as possible and engage in conversations with all of the parties involved, namely management, auditors, actuaries, consultants and IT personnel.
- Remember that although the adoption of PSAK 74 is on 1 January 2025, the earliest assessment should be done is actually on 1 January 2024. Listed insurers are under a tighter schedule because they need to issue interim financial statements that adopt PSAK 74 upon the issuance of the Q1 results, which happens on 31 March 2025. As a consequence, for comparative purposes, 31 March 2024 should be restated accordingly. Barring any changes in the regulatory requirements, non-listed insurers will still have time to adopt IFRS 17 until 31 December 2025.
- Finally, it’s important to challenge management and auditors on their readiness. PSAK 74 requires an unprecedent increase in detailed judgments and estimates in almost every accounting aspect from recognition to measurements and disclosures. Those charged with governance should ask management how they plan to prepare those numbers and ask the auditors how they plan to examine and challenge those numbers. With this in mind, KPMG is committed to providing our insights on the information provided by a number of global insurers on the implementation of IFRS 17 and IFRS 9 Financial Instruments.
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