Insurance Accounting Advisory Quarterly

FY2025 marks the third full year of IFRS 17 reporting and disclosures now reveal a market that is moving decisively from implementation to refinement and optimisation.

While insurers continue to adjust assumptions and methodologies as experience develops, the landscape remains characterised by diversity in actuarial and accounting practice, particularly in areas where IFRS 17 provides flexibility for judgement.

Our Insurance team explains the key changes below, along with a look ahead on what to expect.

Where are we now?

FY2025 disclosures show continuing sharpening of measurement techniques, especially around the quantification of non‑financial assumption changes, targeted model recalibrations and accounting policy changes to manage accounting mismatches.

In comparison variation was largest and disclosures were often high‑level in FY2023 whereas FY2024 saw noticeable improvements in granularity.

Accordingly, FY2025 shows a pattern of incremental but meaningful enhancements with insurers increasingly comfortable adjusting and explaining models as real experience accumulates.
What still diverges?

Despite clearer disclosures overall, several areas continue to show material dispersion across the market.

Yield‑curve methods and risk adjustment disclosures remain uneven while coverage‑unit rationales are variably explained.

Additionally, there is continued diversity in KPIs and operating metrics as non‑life groups still lead with combined ratios while gradually improving links to IFRS 17 subtotals.
What next?

With IFRS 18’s effective date approaching, FY2025 disclosures reflect varying degrees of readiness.

The need to tighten presentation discipline, establish robust definitions and ensure traceability between KPIs and audited financial statements is becoming more pressing.

Niall Naughton

Partner, Head of Insurance

KPMG in Ireland

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From first‑year foundations to targeted refinements

FY2023 was characterised by significant divergency in respect of discount rate methodologies, coverage unit approaches and boilerplate treatment of significant judgements. FY2024 began to show greater company‑specific enhancements, including better disclosures, more detailed accounting policy explanations and early evidence of methodology adjustments.

FY2025 consolidates this trajectory with incremental model enhancements rather than wholesale change, signalling a maturing measurement toolkit.

Across FY2025 disclosures, insurers provided a richer and more granular view of the impact of non‑financial assumption updates and methodology refinements.

While the specific drivers differ by business model and product mix, the disclosures collectively point to a market that continues to iterate its IFRS 17 measurement frameworks as experience develops and modelling sophistication increases.

Updates and refinements

In this regard, we note that some life insurers made periodic updates to non‑financial assumptions such as lapses, policyholder behaviour, persistency, mortality, morbidity and expenses.

Further, refinements to the estimation of the risk adjustment for non‑financial risk were noted, with updates aimed at better capturing diversification effects.

Enhancements to the estimation of non‑distinct investment components and valuation improvements reflected the better use of underlying data, updated actuarial techniques and a closer alignment between modelling frameworks and the characteristics of the products being measured.

Market transition

Additionally, changes in accounting policies were noted in respect of disaggregation of insurance finance income or expenses between profit or loss and other comprehensive income in order to align with the presentation of invested assets.

In this regard, it was noted that recognising insurance finance income or expenses on the insurance contract through profit or loss resulted in an accounting mismatch as the corresponding invested assets are recognised at fair value through other comprehensive income.

Accordingly, this better reflects the economics of the underlying strategy.

The cumulative picture suggests a market transitioning from the “settling‑in” stage of IFRS 17 to ongoing optimisation but continued diversity in judgement, characterised by:

Greater willingness to refine methodologies as new data emerges;
Stronger integration between actuarial modelling, finance systems and reporting teams; and
Improved transparency in the drivers of year‑on‑year performance.

Continued divergence in practice

Discount rates
Previous financial reporting already showed significant variation in yield‑curve construction and disclosure detail. While minor curve adjustments were made by some insurers, methodologies remain diverse and emphasises the need for clearer sensitivity narratives.

Differences in discount rates typically pertain to the following aspects:
- Construction of the bottom‑up or top‑down yield curves;
- Liquidity premium approaches;
- Decompositions of credit spreads; and
- Sensitivity disclosures.
Risk adjustment
The risk adjustment divergences and inconsistencies typically pertain to the following aspects:
- Confidence‑level disclosures;
- Approaches to diversification; and
Parameterisation methodologies in respect of how insurers choose, structure and calibrate the inputs and assumptions used within a model.
Coverage units
Despite improvements since first year reporting, coverage unit rationales are not uniformly disclosed with sufficient granularity.

In this regard, it is typically noted that:
- Some insurers provide granular justification linked to service patterns;
- Others rely on high‑level descriptions lacking operational clarity; and
- Few provide numerical illustrations.
Accordingly, the lack of transparent and comparable disclosures continues to the ability to assess the emergence pattern of CSM across the market.
KPIs

FY2025 continues to show definition differences and varied reconciliations back to IFRS 17 subtotals.

Non‑life insurers continue to anchor external communication around combined ratios and related underwriting metrics. While there has been incremental improvement in aligning such KPIs with IFRS 17 subtotals, definitions and reconciliations remain varied.

On the other hand, life insurers increasingly incorporate CSM related KPIs with diversity in the level of sophistication, some providing detailed roll‑forwards and others relying on high‑level narrative commentary.

Even in the third full year of IFRS 17, diversity persists in how insurers apply judgement across key measurement aspects and disclosures.

While methodologies and disclosures are clearly becoming more mature, the depth and breadth observed indicates that genuine convergence across the market remains some distance away.

The diversity is not inherently problematic, but it reinforces the importance of transparent disclosures so that users can understand, compare and interpret performance on a like‑for‑like basis.

Looking ahead

The forthcoming adoption of IFRS 18 will reshape how performance is presented and how management‑defined performance measures (“MPMs”) are governed.

This places a greater emphasis on clarity, comparability and the linkage between narrative and audited subtotals. As insurers refine their IFRS 17 methodologies, IFRS 18 will act as a catalyst for further discipline around income‑statement structure, aggregation and disaggregation principles as well as the consistency of performance metrics.

With enhanced guidance and insights emerging, stakeholders should expect the conversation to broaden from how insurers measure under IFRS 17 to how they communicate performance across both standards.

Against this backdrop, continued attention will be needed to ensure that evolving modelling approaches, assumption sets and KPI frameworks remain coherent, explainable and aligned with emerging reporting norms.