Large insurers have stepped up their preparations for IFRS 17 and IFRS 9, but smaller insurers have fallen further behind in preparing, according to a new report from professional services firm KPMG International.

Sixty-seven per cent of large insurers (with premiums over $10 billion) surveyed are in the design or implementation phase for IFRS 17, with almost as many, 64 per cent, in a similar place with respect to IFRS 9, said the report titled “In it to win it”.

By comparison, among smaller insurers (with premiums under US$1 billion), only 10 and 25 per cent have started design or implementation for IFRS 17 and IFRS 9, respectively.

However, even with the progress many insurers have made, major hurdles remain in making IFRS 17 and IFRS 9 operational.  Ninety per cent of insurers said they foresee difficulties in securing sufficient skilled people to do the job and half are worried about securing the necessary budget.

Mahesh Balasubramanian, Partner and IFRS lead at KPMG in Bahrain commented on the report findings, and said: “Companies around the world are well underway in their pursuit to implement the necessary changes to comply with the new reporting standards, while the region is still warming up to the impact of this significant accounting change.

“IFRS 17 and IFRS 9 can be considered a catalyst for innovation, enabling insurers to take a fresh look at their strategies and financial and actuarial processes. Although implementation cost can be significant, our research demonstrates that opportunities presented can be even greater.”

With the numbers of people required for this complex work, securing sufficient talent is becoming an increasingly acute challenge.  Nearly half, 45 per cent, of the largest insurers already have teams of 50 or more and half of the mid-size insurers have up to 25 people assigned.  Increased training is also a critical need, and the majority of insurers have so far delivered training only for members of their implementation teams.

Despite the challenges ahead, virtually all, 97 per cent, of the largest insurers surveyed, view implementing the new IFRS standards as an opportunity to transform their business, with a focus on process optimization (identified by 77 per cent), actuarial process enhancement (65 per cent) and system modernization (58 per cent).

New operational challenges will come into focus as preparations advance.  Only seven per cent of insurers surveyed expect to be ready in time for two years of parallel running; more than half, 56 per cent, anticipate just one year of parallel running before going live. Insurers are further along with IFRS 9 implementation, with about three-quarters planning to defer IFRS 9 implementation so it coordinates with IFRS 17. – TradeArabia News Service