A post-implementation analysis of the impacts of IFRS 17 by insurers through a comparison with Solvency II
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- Solvency II (SII) is the prudential regime for insurance and reinsurance undertakings in the EU. It came into force in January 2016. The goal of Solvency II is to ensure that policyholders and beneficiaries receive adequate protection. International Financial Reporting Standard (IFRS) 17 (previously IFRS 4 Phase II) was issued in 2017 with an effective date of 1 January 2023. The aim of the International Accounting Standards Board (IASB) with IFRS 17 was to increase transparency and reduce diversity in the accounting treatment of insurance contracts. Solvency II adopts a risk-based approach, using a set of prescribed quantitative and qualitative measures to assess the solvency of insurance and reinsurance undertakings. IFRS 17 adopts a more principle-based approach to financial reporting for insurance companies, outlining overall principles to be applied appropriately by insurers rather than prescribing strict rules. Although both standards aim to provide an accurate and transparent accounting framework for insurance contracts, they do so in different ways. This thesis aims to analyze the differences between IFRS 17 and Solvency II, identify challenges, and find potential areas of improvement or alignment between the standards.