Insurers are in no hurry to switch to the new reporting standard under IFRS 17 due to high prices and scarce software

The transition of insurance companies to the new reporting standard under IFRS 17 is difficult and slow. Mostly large market participants, including those included in banking groups, completed the work. For regulators and investors, IFRS increases the transparency of the insurance business and simplifies forecast estimates. But experts note problems with obtaining the necessary software, high prices for it, as well as a lack of interest from market participants.

Less than half of the insurers were able to develop or purchase the software necessary to support calculations and accounting in accordance with IFRS 17, it follows from report B1, which Kommersant reviewed. The situation is best in large organizations: the average percentage of completion of work on the transition to IFRS 17 for insurers with a collection volume of more than 50 billion rubles. exceeds 50%, but in companies with fees of less than 15 billion rubles. is less than half.

The project to transition to IFRS 17 as a whole is quite costly, experts and market participants say. More than half of insurance companies, both small and large, noted that project budgets exceed 60 million rubles, as follows from B1 data. Director of the Kept audit department Maxim Pristalov confirms that the costs of switching to the new standard “can reach tens of millions of rubles,” and the work takes several years.

As explained in B1, this is primarily due to the need for a “significant transformation of the IT infrastructure.” In particular, in addition to creating or purchasing a new IT solution for calculating indicators, it is necessary to make changes to operational accounting systems, create or modify a storage facility, and ensure sufficient server capacity to support calculations.

The hardest thing is for small insurance companies, whose scale of activity is “incomparable with such expenses,” says Olga Basova, senior director for corporate and sovereign ratings at the Expert RA agency.

Difficulties remain in acquiring the software necessary for the transition. Now there are simply no complex software products on the market that completely cover issues related to IFRS 17, says Evgeniy Avdeev, partner of the Marillion group of companies. The supply of ready-made solutions from vendors is very limited, B1 confirms, and “taking into account the approaching deadlines for the start of application of IFRS 17, there are not enough resources from suppliers.”

At the same time, the new standard is of little use to the insurers themselves. According to B1 experts, due to the large number of estimates and assumptions, it can lead to “difficulties in comparing yourself with competitors.” In addition, the need to take into account the use of current estimates to determine the amount of liabilities that change at each reporting date leads to volatility in the financial result.

According to Kommersant’s interlocutor in the insurance market, its participants expect to shift the timing of the transition to the new standard. The All-Russian Union of Insurers did not respond to Kommersant’s request.

But regulators and investors are interested in the standard: it, for example, involves the disclosure of such important information as the profitability of a new business and changes in the margins of an existing one, and the presence of onerous contracts in the portfolio. This information, experts note, makes it possible to make more accurate forecasts regarding future profits, assess the quality of underwriting decisions and the company’s pricing policy.

Yulia Poslavskaya