• Busting Uber myths

    The ehailing firm is constantly trying, succeeding - and sometimes failing, says Ian Mann.

  • Trapped in a democracy

    The very people elected to bring benefits to all are undermining SA, says Solly Moeng.

  • Marikana spectre

    Five years after the bloody massacre calls for justice are growing louder, says Terry Bell.

Loading...

New reporting standards for insurers may impact shareholders

May 18 2017 17:58
Lameez Omarjee

Johannesburg - Newly introduced financial reporting standards for life insurers, won’t necessarily impact policyholders but it may impact shareholders.

This is according to Andrew Warren, advisory insurance sector leader at Deloitte South Africa, who spoke to Fin24 ahead of the release of the International Financial Reporting Standard (IFRS) 17 for insurance contracts on Thursday.

Previously, insurers complied with IFRS 4. The new standard will become effective after January 2021, 1 so that insurance companies have enough time to comply.  

Warren explained to Fin24 that IFRS 4 allowed insurers discretion in the way in which they recognised profit emergence. However, IFRS 17 will prescribe a uniform accounting policy.

This may require major changes to insurance companies’ actuarial and finance reporting processes, systems and data which can incur greater costs, explained Warren. Higher costs may be incurred for life insurers than short-term insurers.

This is because of the longer duration of life insurance contracts. “A lot more work needs to be done for financial reporting processes,” he said.

These costs won’t filter directly to clients, or their premiums. However it may generate greater operating costs for insurers over the next three years, which would be of concern to shareholders, he explained. “It’s more of a shareholder effect than a policyholder effect.”

Some insurers may even have to defer big projects, or change the timing of projects to manage these costs, said Warren.

With short term insurers, the new accounting standards are similar to current standards, said Warren. “The systems for that are essentially the same, so there will be some changes but not big ones.”

The standards are to be implemented to ensure consistency in reporting. “It does not impact the value proposition to customers. It will impact the investor community and the ability for them to understand what’s going on inside the insurance company,” he reiterated.

The standards will also make financial statements of different insurers more comparable for investors. 

Read Fin24's top stories trending on Twitter:

Follow Fin24 on Twitter, Facebook, Google+ and Pinterest. 24.com encourages commentary submitted via MyNews24. Contributions of 200 words or more will be considered for publication.

reports  |  financial services  |  insurance

NEXT ON FIN24X

 
 
 
 

Company Snapshot

We're Talking About...

Savings Month

It's never too late to start saving. Visit our special issue and add your voice.
 

Money Clinic

Money Clinic
Do you have a question about your finances? We'll get an expert opinion.
Click here...

Voting Booth

The proposal to nationalise SARB will

Previous results · Suggest a vote

Loading...