General Information & Client Service
  • Americas: +1.212.553.1653
  • Asia: +852.3551.3077
  • China: +86.10.6319.6580
  • EMEA: +44.20.7772.5454
  • Japan: +81.3.5408.4100
Media Relations
  • New York: +1.212.553.0376
  • London: +44.20.7772.5456
  • Hong Kong: +852.3758.1350
  • Tokyo: +813.5408.4110
  • Sydney: +61.2.9270.8141
  • Mexico City: +001.888.779.5833
  • Buenos Aires: +0800.666.3506
  • São Paulo: +0800.891.2518
October 19, 2018

EIOPA published a report analyzing benefits of the IFRS 17 standard on insurance contracts. IFRS 17 was issued by IASB in May 2017, becomes effective from January 01, 2021, and is subject to an explicit endorsement before it becomes applicable in the European Economic Area EEA). Overall, EIOPA found that the expected increases in transparency and comparability of insurers' financial statements through IFRS 17, by providing better insights into insurers' business models, have the potential to strengthen financial stability in EEA. Therefore, EIOPA regards the implementation of IFRS 17 as beneficial for the European public good.

This report presents several aspects of the assessment of IFRS 17, including potential effects on financial stability and the European public good; on product design, supply, and demand of insurance contracts; and on the practical implementation of IFRS 17 in light of the applicable inputs and processes for Solvency II. EIOPA performed the analysis in light of the upcoming implementation of IFRS 17 to foster a better understanding of the implications and potential impact of the standard on European insurance and reinsurance undertakings as well as to provide insights into the future interplay between insurers' financial and prudential reporting. The introduction of IFRS 17 is a long overdue and positive shift of paradigm compared to IFRS 17's predecessor IFRS 4 Insurance Contracts. 

The current, market-consistent, and risk-sensitive measurement of insurance obligations in IFRS 17 better reflects economic reality. This supports efficient risk management and allows stakeholders to gain important insights into the entity's business model, exposures, and performance. With regard to the practical implementation of IFRS 17, the analysis concluded that arguably crucial inputs and processes developed for Solvency II can be used, but may need adaptation to varying degrees. Besides the potential need for adaptation, significant efficiency gains are expected. These efficiency gains are most prevalent in the key building blocks of IFRS 17—that is, cash flows, discount rate, and risk adjustment. Despite the significant improvements to the financial reporting applying IFRS 17, EIOPA has reservations on a few concepts that may affect comparability and relevance of IFRS 17 financial statements and should be duly addressed:

  • Principles of IFRS 17 on determining the applicable discount rate and risk adjustment may have exceeded the appropriate level of allowing for entity-specific inputs and consequently may give rise to significantly different and potentially incomparable results
  • Issues such as level of contracts' aggregation or gains from reinsurance contracts held may lead to further complexity of the financial statements

 

Related Links

Keywords: Europe, EU, Insurance, IFRS 17, Insurance Contracts, Solvency II, Reporting, Accounting, EIOPA

Related Articles
News

BCBS Publishes Results of Survey on Proportionality in Bank Regulation

BCBS published a report presenting the results of a survey conducted on proportionality practices in bank regulation and supervision.

March 19, 2019 WebPage Regulatory News
News

US Agencies Adopt Interim Rule to Facilitate Transfers of Legacy Swaps

US Agencies (FCA, FDIC, FED, FHFA, and OCC) are adopting and inviting comments on an interim final rule.

March 19, 2019 WebPage Regulatory News
News

EBA Single Rulebook Q&A: Third Update for March 2019

EBA published answers to seven questions under the Single Rulebook question and answer (Q&A) updates for this week.

March 15, 2019 WebPage Regulatory News
News

OCC Updates Recovery Planning Booklet of the Comptroller's Handbook

OCC updated the Recovery Planning booklet of the Comptroller’s Handbook.

March 15, 2019 WebPage Regulatory News
News

EBA Publishes Report on Convergence of Supervisory Practices Across EU

EBA published annual report on the convergence of supervisory practices in EU.

March 14, 2019 WebPage Regulatory News
News

CPMI-IOSCO Publish Update to Level 1 Assessment of PFMI Implementation

CPMI and IOSCO jointly updated the Level 1 Assessment Online Tracker on monitoring of the implementation of the Principles for financial market infrastructures (PFMI).

March 14, 2019 WebPage Regulatory News
News

Agustín Carstens of BIS Speaks About New Role of Central Banks

While speaking at the 20th anniversary conference of the Financial Stability Institute (FSI), Agustín Carstens, the General Manager of BIS, highlighted the need for regulatory actions in light of the continued evolution of financial technology.

March 14, 2019 WebPage Regulatory News
News

ESMA Analyzes Impact of Regtech and Suptech for Markets and Regulators

ESMA published the results of its analysis of the regulatory and supervisory technologies—also known as regtech and suptech—being developed in response to various demand and supply drivers in the financial sector.

March 14, 2019 WebPage Regulatory News
News

PRA Publishes Policy Statement on Group Supervision Under Solvency II

PRA published a policy statement (PS9/19) that provides feedback on responses to the consultation paper CP15/18 and the final supervisory statement SS9/15 (Appendix) on group supervision under Solvency II.

March 14, 2019 WebPage Regulatory News
News

ECB Announces Start Date for Euro Short-Term Rate

ECB announced that it will start publishing the euro short-term rate (€STR) as of October 02, 2019, reflecting the trading activity of October 01, 2019.

March 14, 2019 WebPage Regulatory News
RESULTS 1 - 10 OF 2759