THE INSURANCE Commission (IC) is optimistic that insurance firms will be able to prepare ahead of the 2023 implementation of new accounting rules, as multinational insurers are expected to comply ahead of time.
Deputy Insurance Commissioner George S. Ongkeko, Jr. said the regulatory body encourages insurers to prepare ahead of the implementation of International Financial Reporting Standard 17 (IFRS 17) Insurance Contracts on Jan. 1, 2023.
“It’s a standard that not only encompasses not only actuarial and accounting but data gathering, structure, software, hardware… It’s very much in depth,” Mr. Ongkeko told reporters on the sidelines of the 15th Philippine Insurance Summit yesterday. “But we are hopeful. As what the Insurance Commissioner (Dennis B. Funa) noted, we are hopeful that it will gain traction across time.”
The IC announced late January that they deferred by another year the implementation of new accounting rules for life and non-life insurers to give firms more time to comply.
The IFRS is a set of accounting standards that are recognized by 166 economies, including the Philippines. It provides a guide on how transactions and other information should be reported in financial statements.
Currently, the IFRS 4 Insurance Contracts is being observed and implemented.
Mr. Ongkeko said multinational insurers operating in the country will be able to comply ahead of the scheduled enforcement as they are following the timetable of their parent firms.
“Multinational companies have regional support (and observing) best practices around the world. I don’t think they will defer,” he said. “By 2022, I guess multinationals will implement globally (the IFRS 17). That will be a good footprint for the local companies to follow suit.”
Reynaldo C. Centeno, board secretary of the Philippine Life Insurance Association, Inc., said that domestic insurers are “actually the worry of the insurance industry” as some of them might be finding a hard time complying.
“I think this is shared by the IC but there are task force engaged now in doing what the insurance companies should do,” Mr. Centeno said.
The implementation of IFRS 17 comes at a time when insurers are beefing up their capital ahead of the upsized minimum statutory requirement of the IC, wherein insurance companies should have at least P900 million in net worth by the end of 2019 from the current P550 million.
To ensure the compliance of the regulated firms, Mr. Ongkeko said the IC will deploy a team to survey the progress made by the insurers in the adoption of the new accounting standards.
“The commissioner has already instructed a certain team in the IC to have a survey in terms of progress in the IFRS….So from the IC’s standpoint, there should be some sort of funding in terms of system on infrastructure in place that the company should look into.”
“We are hopeful that it will progress and not get distracted by the deferrals but to use that time wisely to move forward,” Mr. Ongkeko noted. — Karl Angelo N. Vidal