Author information:
Zsófia Szikráné Lindner https://orcid.org/0009-0005-3272-2504: Magyar Nemzeti Bank, Actuary. E-mail: szikranelizs@mnb.hu
Beatrix Dénes https://orcid.org/0009-0000-7255-0296: Magyar Nemzeti Bank, Chief Supervisor. E-mail: denesb@mnb.hu
Gabriella Kosztik https://orcid.org/0009-0004-1365-5839: Magyar Nemzeti Bank, Actuary. E-mail: kosztikg@mnb.hu
Gabriella Merész https://orcid.org/0009-0001-6068-2424: Magyar Nemzeti Bank, Head of Department. E-mail: mereszg@mnb.hu
Mária Somogyvári Sándorné: https://orcid.org/0009-0007-1038-1192: Magyar Nemzeti Bank, Supervisory Advisor. E-mail: somogyvarisne@mnb.hu
Abstract:
The analysis presents the effects and supervisory experience of the transition to IFRS 17 applicable to the insurance sector from 1 January 2023. The new standard is significant as it sets out a harmonised methodology for insurance contracts based on fair value, which is also the greatest challenge. It is estimated that the sector spent HUF 13.5 billion between 2018 and 2023 to prepare for IFRS 17. Three insurers report under IFRS: the accounting policies of these companies have changed significantly, and the transition has resulted in an overall increase in their equity. Twelve other insurers belonging to international groups prepare IFRS calculations for the group accounts. The application of IFRS 17 mainly affects these entities in terms of business plans and performance measurement. For these institutions, the analysis of IFRS calculations showed that the impact on equity varies in direction and magnitude, but that overall the application of IFRS would result in an increase in equity.
Cite as (APA):
Szikráné Lindner, Z., Dénes, B., Kosztik, G., Merész, G., & Somogyvári Sándorné, M. (2024). Main Impacts of the Introduction of IFRS 17 on the Hungarian Insurance Sector. Financial and Economic Review, 23(3), 71–98. https://doi.org/10.33893/FER.23.3.71
Column:
Study
Journal of Economic Literature (JEL) codes:
G22, M41, M48
Keywords:
IFRS 17, accounting, insurance, capital position, supervision
References:
Árendás, Á.T. – Orbán, B. – Urbán, D. (2018): Az IFRS 17 hatásai a biztosítók üzleti működésére és pénzügyi eredményére (Impact of IFRS 17 on insurers’ operation and financial results). Biztosítás és Kockázat, 5(3): 59–75. https://doi.org/10.18530/BK.2018.3.58
Bora, Z. – Holczinger, N. – Merész, G. – Velcsov, G. – Zubor, Z. (2016a): Az utolsó felkészülési célú Szolvencia II mennyiségi hatástanulmány eredményei (Results of the last preparatory Solvency II quantitative impact assessment). Biztosítás és Kockázat, 3(1): 14–35. https://doi.org/10.18530/BK.2016.1.14
Bora, Z. – Holczinger, N. – Nagy, K. – Merész, G. (2016b): The insurance sector at a milestone: positive initial experiences with the newly introduced Solvency II system. Financial and Economic Review, 15(4): 88–114. https://en-hitelintezetiszemle.mnb.hu/letoltes/zsuzsanna-bora-norbert-holczinger-koppany-nagy-gabriella-meresz.pdf
Deloitte (2020): Should insurers leverage Solvency 2 discount rate techniques when valuing insurance liabilities under IFRS17? https://www2.deloitte.com/content/dam/Deloitte/fr/Documents/services-financiers/publications/deloitte_discounting-under-ifrs17.pdf. Downloaded: 6 August 2024.
Deloitte (2023): Financial KPIs in a IFRS17 World. Deloitte EMEA A&IS Working Group Report. https://www2.deloitte.com/content/dam/Deloitte/il/Documents/audit/2023/ifrs17/KPI-Working-Group-Deloitte-Whitepaper-DKN.pdf. Downloaded: 13 March 2024.
EIOPA (2024): Report on the implementation of IFRS 17 – Insurance contracts. https://www.eiopa.europa.eu/publications/report-implementation-ifrs-17-insurance-contracts_en.Downloaded: 31 May 2024.
G. Szabó, A. – Nagy, K. (2021): Situation and Financing Capacity of the Hungarian Insurance Market. Financial and Economic Review, 20(4): 170–1791. https://en-hitelintezetiszemle.mnb.hu/letoltes/fer-20-4-fa3-szabo-nagy.pdf
Hanák, G. (2017): IFRS 17 ante portas. A biztosítók pénzügyi jelentéseire vonatkozó új nemzetközi szabvány, az IFRS 17 kérdésköre – három évvel a bevezetés előtt (IFRS 17, the new international standard for financial reporting by insurers – three years before its implementation). Biztosítás és Kockázat, 4(4): 30–51. https://doi.org/10.18530/BK.2017.4.30
IAIS (2022): Overview of the use of options provided in the IAS Regulation (1606/2002) in the EU. International Association of Insurance Supervisors. https://finance.ec.europa.eu/document/download/1c546870-ee26-4c53-8b12-796bd0b96793_en?filename=ias-regulation-use-of-options-overview_en.pdf. Downloaded: 1 March 2023.
Kozma, N. (2023): “Az együttműködés ereje – a biztosítási szerződésekre vonatkozó új nemzetközi beszámolási standard (IFRS 17) bevezetésének tapasztalatai” Interjú Balogh Anikóval, a KPMG Tanácsadó Kft. igazgatójával (‘The power of cooperation – experience of the implementation of the new international accounting standard for insurance contracts (IFRS 17)’ Interview with Anikó Balogh, Director of KPMG Tanácsadó Kft). Biztosítás és Kockázat, 10(3–4): 104–111. https://doi.org/10.18530/BK.2023.3-4.104
Lakatos, L.P. (2023): IFRS 17 – biztosítási szerződések standard: Mi vár a szakmára az új standard bevezetése kapcsán? A „Biztosítási piacról jogászoknak, biztosítási jogról közgazdászoknak” konferencia pódiumbeszélgetésének összefoglalója (IFRS 17 – Insurance contracts standard What can the industry expect from the introduction of the new standard? Summary of the panel discussion of the conference ‘Information on the insurance market for lawyers and on insurance law for economists’). Biztosítás és Kockázat, 10(3–4): 89–103. https://doi.org/10.18530/BK.2023.3-4.88
KPMG (2020): Illustrative disclosures for insurers, Guide to annual financial statements IFRS17 and IFRS9. https://assets.kpmg.com/content/dam/kpmg/xx/pdf/2020/09/2020-ifs-insurance.pdf. Downloaded: 13 March 2024.
Mottura, C. (2021): IFRS17 vs Solvency II and local GAAP approaches to insurance statements: A case study. Collana del Dipartimento di Economia Aziendale. Working Paper No. 13. https://economiaziendale.uniroma3.it/wp-content/uploads/sites/9/file_locked/2021/02/WP-13_Mottura.pdf. Downloaded: 2 August 2024.
Palmborg, L. – Lindholm, M. – Lindskog, F. (2021): Financial position and performance in IFRS 17. Scandinavian Actuarial Journal, 2021(3): 171–197. https://doi.org/10.1080/03461238.2020.1823464
PwC (2017): Using Solvency II to implement IFRS 17. https://www.pwc.pt/pt/industrias/seguros/pwc-using-solvencyII-IFRS17.pdf. Downloaded: 6 August 2024.
PwC (2019): IFRS 17, Insurance Contracts: An illustration. Financial statements presentation and disclosures. https://www.pwc.com/id/en/publications/assurance/ifrs-17-insurance-contracts.pdf. Downloaded: 23 January 2024.
Szepesváry, L. (2019): Onerous test, avagy az IFRS 17 szerinti veszteségességi vizsgálat. Aktuáriusi és informatikai kihívások egy életbiztosítási portfólió példáján (Onerous test, or the loss test under IFRS 17. Actuarial and IT challenges through the example of a life insurance portfolio). Biztosítás és Kockázat, 6(2): 18–37. https://doi.org/10.18530/BK.2019.2.18