On January 1, 2022 - IFRS 17 - one of the biggest changes to insurance accounting in more than 20 years goes into effect.
According to the International Accounting Standards Board, $13 trillion total assets of 450 listed insurers using International Financial Reporting Standard (IFRS) standards must become compliant with IFRS 17, which will dictate an overhaul of financial statements, tighter system integrations, and more granular auditability.
IFRS 17 includes three measurement approaches, which have markedly different requirements when compared with existing standards:
- Building Block Approach (BBA) or General Model: Standard approach applicable to insurance contracts and reinsurance assets held by the insurer
- Premium Allocation Approach (PAA): Simplified approach for short duration contracts or re-claims obligation at initial recognition
- Variable Fee Approach (VFA): Applicable to contracts with direct participating features
To help insurers comply, Wolters Kluwer released the CCH Tagetik IFRS 17 Solution for Insurance Contracts which handles all three measurement approaches by providing a centralized IFRS reporting hub that includes a data repository, calculation modeling, reporting, and disclosures as well as workflow management and complete data auditability.
In addition, CCH Tagetik delivers expert commentary about IFRS 17 through informational webinars and a descriptive eBook. Through these channels, CCH Tagetik provides insurers with a deep look at the requirements for insurance contract accounting and reporting, the impact of IFRS 17 on existing enterprise systems, and the criteria for evaluating IFRS 17 solutions. For example, organizations should employ a solution with specific capabilities including seamless integration with any data source, data normalization capabilities to identify the proper level of data granularity, and workflow capabilities to drive and guide throughout the entire process.
“Regulations like IFRS 17, that center around data transparency, is an area that the Office of Finance must continually be prepared to comply with,” said Manuel Vellutini, Executive Vice President, CCH Tagetik, Wolters Kluwer Tax & Accounting. “CFOs should look for an effective solution that will integrate quickly and easily with other enterprise systems while remaining flexible to accommodate future changes.”
CCH Tagetik’s IFRS 17 solution manages all aspects of compliance – including data collection, calculations, postings, reporting, and disclosures. Non-disruptive to enterprise architectures, the solution creates a single repository for insurance contracts and easily integrates with any source system.