The standard confirms that reinsurance needs special treatment. Reinsurance contracts held are to be valued and accounted for separately. The requirements don’t look particularly challenging at first glance, but common reporting practice for many insurers is an approximate method of ‘netting down’ (that is gross less reinsured). This won’t be adequate post-2021, and insurers that underestimate the consideration required for reinsurance as part of their IFRS 17 implementation plans could face an unpleasant surprise under the new regime.
Mismatches between underlying contracts and reinsurance arrangements can appear in several places in the valuation process, which have the potential to cause volatility in profit reporting. Our guide includes a useful mismatch checklist to help you to gauge the size of the challenge for your reinsurance.
Associate Director, PwC United Kingdom
Tel: +44 (0)7809 755 802
Director, PwC United Kingdom
Tel: +44 (0)7764 902 751
Global IFRS 17 Technical Partner and TRG Member, PwC United Kingdom
Tel: +44 (0)7712 489 634