The implementation of IFRS 17 has significantly improved transparency and comparability in the financial statements of insurers, according to a recent report by Fitch Ratings.
The global accounting standard has prompted insurers in the Asia-Pacific region, particularly in South Korea and Taiwan, to reassess their product offerings. These changes come as insurers adapt to the new reporting requirements under IFRS 17. However, the standard’s impact on European and Canadian insurers has been minimal, with many still primarily guided by regulatory solvency requirements in their strategic and capital management decisions.
Although full comparability has not yet been achieved, Fitch highlighted that financial disclosures are becoming increasingly aligned, with expectations for further improvements in future reporting cycles.
Fitch also noted that the introduction of the Contractual Service Margin (CSM) under IFRS 17 has enhanced the predictability of insurer profits. By recognizing unearned income over time, the CSM provides clearer visibility into both growth opportunities and risks, although the standard has not changed Fitch’s assessment of insurers’ underlying profitability.
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