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New accounting standards : a major challenge for insurers, according to KPMG

by

Hubert Roy

December 10, 2018 13:30

Photo : Freepik

For the consulting firm KPMG, some disturbances also weigh heavy on the canadian insurers that the arrival of the IFRS 17.

The new rules governing the accounting will have impacts on the current process and a direct impact on all the players, including insurers, multinational companies which are established on the canadian market, one can read in the Report 2018 of KPMG on the opportunities and risks in the canadian insurance industry. The firm points out that these changes are in addition to those undertaken almost ten years with the IFRS 9.

How do you get it ?

“IFRS 17 is a huge challenge,” said Dana Chaput, leader, changes to the accounting for insurance contracts, for KPMG in Canada. Canada is one of the few countries in the world where all the insurers, of any size, must comply with it. Insurers ambitious take advantage of this change to improve the processes within the functions of finance, or actuarial science, to increase the automation and to train the leaders of tomorrow. “

The rules governing the accounting that leads to the IFRS 17 will have repercussions on the regulatory, capital and tax regime, ” says Ms. Chaput. “The regulators and the tax authorities are doing their best to indicate the direction they will take. They must first update the requirements. It’s a bit like the question of egg and hen. Insurers in implementing IFRS 17, but the issues related to capital and taxation) remain outstanding. “

Not that the IFRS to be considered

The IFRS is not the only consideration of a regulation. Changes occurring in the United States will also be considered. The Financial Accounting Standards Board (FASB) is reviewing the accounting for insurance contracts of long duration according to the generally accepted accounting Principles (GAAP), which remain the benchmark in the United States.

The insurers will therefore be required to report how they evaluate the liabilities of certain insurance contracts and amortize the costs of deferred acquisition. The new expectations of the knowledge of the customer and of the product, or that the calculations for the revised capital adequacy Test life insurance (TSAV), should also put pressure on insurers as they try to keep pace and remain compliant on a number of fronts, says KPMG in its report.

Reading for next Monday : The insurers want to better know their customers

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