Vitalina Kobernik, a director and IFRS 17 technical accounting lead at Mazars, explains how the consultancy's extensive knowledge and experience in IFRS 17 can benefit insurers in effectively implementing the standard
Why should insurers come to Mazars for expertise in the IFRS 17 accounting standard?
There are three key features that make Mazars' IFRS 17 consultancy services attractive.
Firstly, we have our extensive experience in IFRS 17 consulting across Europe and the UK. Our structure allows us to freely collaborate with our cross-border colleagues, which provides a greater service to our global clients. We also participate in the auditor's working groups to examine the technical issues around standards implementation. Along with IFRS 17 accounting advisory projects, we deliver internal audit engagements to assure insurers' readiness for IFRS 17 implementation.
Secondly, there is our unique knowledge and technical expertise in IFRS 17, which comes not only from our numerous implementation projects around the world, but also from our partners' and directors' direct involvement in IFRS 17 standards setting. I was involved in IFRS 17 standard setting as a member of the IASB staff, and our IFRS 17 actuarial lead James Isherwood led the standard setting lobby at CFO Forum. This two-dimensional expertise means we are aware of common mistakes others make during IFRS 17 implementation projects, and we assist insurers in avoiding those mistakes, providing proper implementation of the standard.
And thirdly, we have an ongoing commitment to help a wider audience of insurers. We regularly present at professional conferences, supporting not only our clients, but other insurers. Most recently, this has included various ILAG sessions and the InsuranceERM conference. Our focus is on highlighting topics not yet explored, to assist insurers with effective implementation. Our publications inform a wider audience of insurers not only on recent standard developments, but also on various hot topics in the market.
After IFRS 17 has been implemented, how will insurers' operations look?
First of all, it's important to say the IFRS 17 journey for insurers will hardly be over on 1 January 2023. So, I'd say once IFRS 17 is there, insurers might realise the need for other changes – from internal controls and process enhancements to business portfolio revision and digital transformation. Topics like alternative performance measures and KPIs are becoming more important, both from the perspective of interaction with IFRS 17 and also from the regulator's perspective. Bringing those changes together in a timely manner, will hopefully result in a more efficient operational environment for insurers.
Do you expect major changes in the key performance indicators (KPIs) used by insurers because of IFRS 17?
Definitely. Many insurers will need full-scope KPI framework reengineering. The new framework should respond to the new insurance standard complexities, but also provide an opportunity to tell the whole story to investors and users of the financial statements – the story to explain value creation, and how to interpret the accounting arising from IFRS 17 application.
Recently, together with James Isherwood, we published two articles about KPI changes due to IFRS 17 and other upcoming IFRS standards. They contain very detailed research of how KPIs will change and were rather well received by IFRS 17 community - so I'd use the opportunity to share the link here too.
Aside from IFRS 17, are there other key regulatory priorities for insurers in 2022 that Mazars can support insurers with?
Besides IFRS 17, it is clearly ESG that will affect insurers, and has already impacted them to a certain extent. Reporting requirements for insurers will be more rigorous, for example TCFD is mandatory for some insurers this year and others will come in next year. Some still won't have to comply with the framework, but will definitely need to extend climate disclosures in their financial statements, especially following the thematic FRC review on the topic.
Another upcoming regulation in ESG is the new international standard to be issued by the International Sustainability Standards Board. In the UK we already have an established team successfully helping insurers to comply with ESG requirements. It's led by our partner Dorian Hicks. The entire firm is sharing knowledge in this space, and building tools to help implement mandated regulations.