At the end of May this year, the International Accounting Standards Board (IASB) published the latest accounting standards for insurance contracts – the IFRS 17. The new standards come into effect on January 1, 2021. They will not change the way insurance companies do business but the way they have to report about it.
The most important changes that IFRS 17 will bring concern the methodology of assessing insurance policies and contracts. So far, they were rated according to past developments and data available at the beginning of their lifespan. With IFRS 17, the process will become future-oriented as contracts will be evaluated according to future cash-flows. Life insurance contracts, which normally live for many years, will especially be affected.
“IFRS 17 revolutionizes accounting,” Allianz Chief Accountant Roman Sauer said in an interview to German online publication Finance Magazin, adding that Allianz has spent a lot of time preparing the upcoming implementation. “It’s important to look at the basic implications of IFRS 17 on our processes and IT infrastructure as early as possible.” For customers and investors, this brings benefits such as increased transparency.
So what will change for you and for us? Watch the video below to walk through the process.