Insurance accounting advisory quarterly

Understand reporting under IFRS 17 and IFRS 9

30 April 2024

1 min read

IFRS 17 has become effective on 1 January 2023. This marks a significant shift in accounting practices within the insurance industry in Ireland and has placed significant pressure on many finance functions through the year end cycle.

As global insurers have commenced publishing their full-year IFRS financial statements, we are able to gain crucial insights into the implications of the implementation of IFRS 17 and IFRS 9. This offers a first hand glimpse into how insurers are adapting to the changes and the potential impacts on their financial reporting.

The KPMG Global IFRS Institute have analysed the full-year reports of 53 insurers across various jurisdictions and summarised the key observations on:

The IFRS 17 and IFRS 9 accounting policies, disclosures and significant judgements;
The impacts of IFRS 17 on key performance indicators (KPIs); and
Transition to IFRS 17 and IFRS 9.

An in-depth analysis focusing on the accounting practices adopted by insurers in Ireland will be released in due course.

The key observations arising from our analysis included the following:

01

Accounting policies, disclosures and significant judgements:

Increased transparency as well as company-specific accounting policies and methodologies.
Level of detail and specificity varied between insurers.
While there is a common set of accounting principles and benchmarks for disclosures under IFRS 17, some variations still exist among insurers.

02

Key performance indicators (KPIs):

Insurers have generally integrated IFRS 17 and IFRS 9 into their KPIs.
Life and health insurers have notably incorporated the contractual service margin (CSM) into their KPIs, reflecting metrics for new business, profitability and company value.
Non-life insurers have shown minimal changes in their KPIs, though some have included specific IFRS 17 line items and adjusted combined ratios accordingly.

03

Transition to IFRS 17 and IFRS 9:

Since the adoption of IFRS 17 and IFRS 9, insurers have reported a reduction in accounting mismatches and income statement volatility, aligning with global trends.