The Hong Kong Federation of Insurers (HKFI), a self-regulatory body for insurers, is urging the Hong Kong Institute of Certified Public Accountants to consider postponing the effective date of IFRS17 for local insurers to 1 January 2023.
This proposal comes in the light of international developments and the fact that HKFI’s member companies find the current timeline exceedingly challenging, according to the organisation’s latest monthly brief.
IFRS17, set to come into force in January 2022, is designed to improve visibility of earnings and make insurance companies’ performance more comparable. For some insurers, IFRS17 will meaningfully alter reported equity and/or profit recognition patterns.
However, it has come to HKFI’s attention that the European Financial Reporting Advisory Group (EFRAG) has proposed to defer the adoption date of IFRS17 further to 2023 while Hong Kong is planning to implement it on 1 January 2021.
This will mean Hong Kong operating to an implementation timetable not consistent with other international insurance centres and facing all the possible downsides, noted HKFI.
In its final comment letter on the IASB exposure draft published in September 2019, EFRAG stated that it welcomed the IASB’s recent decision to defer the effective date of IFRS17. However, it disagrees with 1 January 2022 as the effective date.
The group considers that 1 January 2023 is a realistic effective date, with early application permitted.