The planned changes, the business implications and what you should consider doing now
IFRS Phase II proposes to replace any old-fashioned, often excessively prudent approaches and move towards a more current and market consistent basis that applies to all types of insurance contracts. Solvency II proposes a very similar approach. Mindful preparation will ensure adequate resource is in place to deliver plans to meet the 2012 expected implementation date. Companies should consider:
- Systems upgrades would be necessary for all businesses. Insurers who have already implemented group-wide systems that use current market data (e.g. economic capital or embedded value) could have a head start over competitors.
- Finance and actuarial departments must evolve to transform themselves in hybrid units where both actuarial and accounting excellence is concentrated to deliver optimal input in all business decisions.
- Potentially large cost synergies are available to EU companies when they plan to implement IFRS Phase II and Solvency II. An early assessment of risks and opportunities would give stronger foundations to any future implementation activity.
We hope Get set for IFRS will help you prepare for the changes ahead. To find out more about how IFRS II will impact your company, please contact us.
