Adoption of IFRS17 by PH insurance industry

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THE Philippine Insurance Industry is gearing up for the January 2025 start of the IFRS17, an international financial reporting standard for insurance contracts locally known as PFRS17.

However, in a survey conducted by PIRA, its trade association, 39 out of its 55 member companies have responded, saying only 16 out of the 39 companies are ready with a process to be able to provide the quantitative impact assessment that IFRS17 calls for, with the remaining 23 in various stages of being ready. It must be noted that IFRS17 has significant implications for the general insurance industry.Here are some of the pros and cons:Pros1. Increased transparency.

encourages better risk management practices and helps insurers manage their liabilities more effectively.4. Better performance measurement. The standard allows for a more accurate reflection of profit over time, aligning revenue recognition with the insurance coverage period. This helps stakeholders evaluate an insurer's performance on a more consistent basis.5. Focus on future cash flows.

involves significant costs related to system upgrades, staff training and potential consulting fees. For smaller insurers, these costs can be particularly burdensome.2. Complexity of implementation. The standard is complex and may require considerable effort to interpret and implement correctly. This could lead to inconsistencies in application, particularly among smaller firms or those with less robust infrastructure.3. Increased regulatory scrutiny.

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