German insurers are facing a revolution: from 2022, listed groups will have to change their accounting to the international standard IFRS 17. The system offers opportunities, but also has its weaknesses and costs more than millions. As a result, it could fundamentally change the accounting world of the industry. or Allianz, 2022 has long since begun. The Group has been preparing for this date since 2014. A new accounting era will begin: in 2022, the international accounting standard for insurance products, IFRS 17 for short, will become mandatory for all insurers listed on the stock exchange or otherwise financed on the international capital markets. In addition to Allianz, the reporting obligation affects seven other providers in Germany: Zurich Group, Munich Re, Hannover Re, Talanx, Generali and W&W. Eight years of preparation time – that alone shows how much is new for the industry. The origins of the latest International Financial Reporting Standard, which was adopted by the International Accounting Standards Board in London go back even further: since end of 19 century, auditors and accounting experts in many countries have been considering which rules should be used to value insurance products in the balance sheet and with a view to the income statement so that they all follow a common line.
What is IFRS 17
From the 2023 business year, comprehensive changes regarding the accounting of insurance contracts will come into force. IFRS 17 presented by the IASB thus replaces IFRS 4, which has been valid since 2004. For the first time, an internationally applicable standard for the accounting of insurance contracts will be created that enables comparability between different companies. The introduction of IFRS 17 has far-reaching effects on operational activities and the IT infrastructure. For the accounting companies, the implementation of the standard is the next big topic in the insurance industry after Solvency II. With this article, we provide an insight into the necessity of the new regulation as well as the core content components of the standard.
Time of application
The time needed to develop a generally applicable accounting standard for insurance contracts alone shows the dimension and impact for companies. In particular, the exemption period for the entry, the standard for accounting for financial instruments, is also extended for insurance companies. The decision to extend the transition period was preceded by numerous rounds of discussions before and comments on IFRS 17. The IASB justifies its decision on the date of first-time application, among other things, because of the additional costs that would otherwise arise from projects in the delayed introduction of two standards. In addition, a simultaneous start makes sense since IFRS 17 requires, for example, with regard to embedded derivatives, a separation of options. If you are interested in annual reporting and find out more about standard like IFRS 17 or other standard you can get more information on
annualreporting.info The annual reporting website contains all necessary information on specific standards that you need to know, including changes. Apart from the IFRS 17 you can find informations on standards like the IFRS 15.
