The International Accounting Standards Board has decided to defer the effective date of IFRS 17 from 1 January 2021 to 1 January 2023. Effectively, this gives insurance companies a little over two years from now to implement and apply IFRS 17 to their business. In addition to insurance companies, it is likely that IFRS 17 will be applicable to Takaful companies as well as there is significant insurance risk borne by the risk fund. In Malaysia, most insurance and Takaful companies have already started their implementation phase. Yet there continues to be ambiguity in interpreting several areas of the IFRS 17 standard, including:
- Fulfilment cash flows and contractual service margin for Takaful
- Treatment of surplus sharing
- Premium experience adjustments related to current or past service
- Discount rates
- Transition approaches
- Reinsurance and Retakaful
In this e-Alert we discuss each of these areas of concern.
Malaysia: Key issues and challenges observed around IFRS 17 implementation in life insurance and Takaful
In Malaysia, most insurance and Takaful companies have already started their implementation phase of IFRS 17, but there continues to be ambiguity in interpreting several areas of the IFRS 17 standard.