Insurance change - accounting & much, much more
Insurance change - accounting & much, much more

Insurance change - accounting & much, much more

Insurance change – The business implications are huge

Over the next seven years, the insurance industry will face a tremendous transformation as it responds to changes in reporting and regulatory requirements as well as a changing business and customer landscape. Many business components will be affected and we advise that insurance companies adopt a proactive, holistic, and comprehensive approach to tackling these issues. Insurers will face many new global accounting, regulatory and business requirements – which often differ by jurisdiction.

What exactly are we talking about?

The following accounting changes need to be addressed by insurance companies in the next several years.

  • US GAAP Short Duration Contracts;
  • Principle Based Reserving;
  • US GAAP Long Duration Contracts;
  • IFRS 17 Insurance Contracts;
  • US GAAP Financial Instruments (Classification & Measurement);
  • US GAAP Financial Instruments (CECL);
  • US GAAP Financial Instruments (Hedging);
  • US GAAP Leases;
  • US GAAP Revenue Recognition;
  • IFRS 9 Financial Instruments;
  • IFRS 16 Leases;
  • IFRS 15 Revenue Recognition;
  • Department of Labor Fiduciary Standard;
  • Federal Reserve Capital Standards;
  • Solvency II;
  • EU Audit Reforms;
  • Brexit

This collection of new rules are obviously wide ranging, affect many areas of an insurance company’s accounting, and are best addressed in an all-inclusive and proactive manner.

Accounting change Type 2016 2017 2018 2019 2020 2021
& beyond
Final: ASU 2015-09 - Short-Duration Contracts All
US GAAP — Long-Duration Contracts All
Comment Period, Possible Re-exposure, Final Standard*
*Exposure Draft issued on September 29, 2016
IFRS 17 — Insurance Contracts All
Effective Date to be released with Final Standard*
*Final Standard expected in first half of 2017

U.S. Statutory Reserving

FINAL: Statutory Accounting Principles — Principles-Based Reserving (Term Life and UL) LIFE
Effective January 1, 2017; 3 Year Phase-In
EVENTUAL: Statutory Accounting Principles — Principles-Based Reserving (Other Life, Health and non-Variable Annuity products) LIFE
Modifications to AG43 and C3 Phase 2 LIFE

Capital Standards

FINAL: Solvency II All
*in 28 member states
Federal Reserve All
Guidance Expected

US GAAP Standards — Non Insurance Contracts

FINAL: ASU 2016-02 — Leases All
Early Adoption
FINAL: ASU 2015-14 — Revenue Recognition All
Early Adoption
FINAL: ASU 2016-01 Financial Instruments Classification and Measurement All
FINAL: ASU 2016-13 Financial Instruments – Credit Losses All
Early adoption
SEC Filers
Other Public Entities/Private
US GAAP — Hedging Activities All
Currently in exposure draft redeliberations, possible re-exposure, final standard*
*Exposure draft released on September 8, 2016

IFRS Standards – Non Insurance Contracts

FINAL: IFRS 9 — Financial Instruments
— IFRS 9 — Timeline All
Early adoption
— IFRS 17 — Amendment – IFRS 9 Deferral All
Effective when first applying IFRS 9
Effective, Temporary exemption expires January 1, 2021 or effective date of IFRS 17, if earlier
FINAL: IFRS 16 — Leases All
Early adoption (if IFRS 15 applied)
FINAL: IFRS 15 — Revenue Recognition All
Early adoption

Other Regulatory/ Environmental

FINAL: Department of Labor All
*June 7, 2016
*April 10, 2017
Full compliance*
*January 1, 2018
FINAL: EU Audit Reforms All
*in 16 member states
Rolling impacts

The above table represents the timelines that insurance companies must comply with in order to stay current on all insurance change standards.

How KPMG can help:

  • Keeping you informed;
  • Completing a high level assessment;
  • Designing and implementing the changes to your accounting systems, processes and people.

KPMG’s experienced team and sophisticated tools can help insurance companies to develop and implement a managed and well-executed accounting change program. Our approach can be adopted in phases; we focus on business impacts, effective dates, and established standards to make the process as efficient as possible.

*Some or all of the services described herein may not be permissible for KPMG audit clients and their affiliates. 

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