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The CLHIA request to postpone the international accounting standard of insurance

by

Alain Thériault

8 August 2018 13:30

Stephen Frank | Photo : Réjean Meloche

L’Association canadienne des compagnies d’assurances de personnes (CLHIA) is urging theInternational Accounting Standard Board (IASB) to postpone for two years the entry into force of the international financial reporting standard insurance contracts IFRS 17.

A period of two years would allow insurers to implement more effectively the IFRS 17, and to avoid the risk of unwanted that would lead to its entry into force in 2021, has written to the CEO of the CLHIA, Stephen Frank, in a letter to Hans Hoogervorst, IASB chairman. A canadian delegation of the industry met with Mr. Hoogervorst in London a month earlier, to discuss the report of this nor

L’Association canadienne des compagnies d’assurances de personnes (CLHIA) is urging theInternational Accounting Standard Board (IASB) to postpone for two years the entry into force of the international financial reporting standard insurance contracts IFRS 17.

A period of two years would allow insurers to implement more effectively the IFRS 17, and to avoid the risk of unwanted that would lead to its entry into force in 2021, has written to the CEO of the CLHIA, Stephen Frank, in a letter to Hans Hoogervorst, IASB chairman. A canadian delegation of the industry met with Mr. Hoogervorst in London a month earlier, to discuss the deferral of this standard, which came into force on January 1, 2021.

An insurer is not a bank

The CLHIA has argued that insurers need more time to implement IFRS 17 that the banks have needed when they have implemented IFRS 9. Established in 2018, IFRS 9 addresses the accounting for financial instruments. “The impact of IFRS 17 on insurers is significantly deeper than the one was that of IFRS 9 on banks, writes Mr. Frank. These cumulative impacts require more time and making less relevant the lessons that could be learned from the implementation of IFRS 9. “

The CEO of the CLHIA believes that IFRS 17 will require, among others, to change systems, to recast the financial statements and change of indicators of critical performance. IFRS 17 is also affecting other regulatory requirements, including those on financial liabilities, remained unchanged under IFRS 9, said Mr. Frank.

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Another major difference between insurers and banks : insurers will have to restate their results of the year preceding the year of the implementation of IFRS 17, in order to ensure that the two periods are comparable under the new standard.

The letter of the CPOMA refers to a number of other major differences, including changes in light of the federal income tax laws and the impact of the IFRS 17 on the new test of solvency of insurers in force from 1 January 2018.

Before 2019

The CLHIA argues that Mr. Hoogervorst announced a delay later than in 2018. After, this may result in an inefficient process and the waste of resources, argued the CLHIA. According to her, the insurers expect 2019 to be an extremely busy year. The immediately preceding 2020, a year in which insurers will have to start counting of their financial data in a comparable format under IFRS 17. The implementation of the standard will require in 2019, an intense work on multiple fronts.

me, whose entry into force is planned for 1 January 2021.

An insurer is not a bank

The CLHIA has argued that insurers need more time to implement IFRS 17 that the banks have needed when they have implemented IFRS 9. Established in 2018, IFRS 9 addresses the accounting for financial instruments. “The impact of IFRS 17 on insurers is significantly deeper than the one was that of IFRS 9 on banks, writes Mr. Frank. These cumulative impacts require more time and making less relevant the lessons that could be learned from the implementation of IFRS 9. “

The CEO of the CLHIA believes that IFRS 17 will require, among others, to change systems, to recast the financial statements and change of indicators of critical performance. IFRS 17 is also affecting other regulatory requirements, including those on financial liabilities, remained unchanged under IFRS 9, said Mr. Frank.

Back

Another major difference between insurers and banks : insurers will have to restate their results of the year preceding the year of the implementation of IFRS 17, in order to ensure that the two periods are comparable under the new standard.

The letter of the CPOMA refers to a number of other major differences, including changes in light of the federal income tax laws and the impact of the IFRS 17 on the new test of solvency of insurers in force from 1 January 2018.

Before 2019

The CLHIA argues that Mr. Hoogervorst announced a delay later than in 2018. After, this may result in an inefficient process and the waste of resources, argued the CLHIA. According to her, the insurers expect 2019 to be an extremely busy year. The immediately preceding 2020, a year in which insurers will have to start counting of their financial data in a comparable format under IFRS 17. The implementation of the standard will require in 2019, an intense work on multiple fronts.

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