From 1 January 2023, new requirements set out in the International Financial Reporting Standards (IFRS) on Insurance Contracts and Financial Instruments will change how insurance companies are required to measure and report their performance. From a geographic standpoint, these new reporting standards will have broad global coverage, with some notable exceptions, including the US.1
The accounting standards, set out in IFRS 9 and 17, will affect every sector of the insurance industry and will have a significant impact on long-term contracts, notably for life and health insurance. In particular, the changes will influence how insurers’ investment teams and actuaries manage assets and liabilities and allocate to fixed income, equity and hedging strategies.
Here, in the first of three papers on the new accounting standards, we outline the implications of these changes for managing insurance investment portfolios and balance sheets.