Investigating the Challenges of Implementing International Financial Reporting Standard 17 in Life Insurance and Proposing Solutions to Overcome Them

Hamid  Dianatpey; Mohammad Reza Nikbakht; Ezzatollah  Abbasian

Authors

Hamid Dianatpey Ph.D. Student, Department of Accounting, International Campus Branch, University of Tehran, Tehran, Iran Author https://orcid.org/0009-0003-9396-211X
Mohammad Reza Nikbakht Associate Professor, Department of Accounting and Financial Sciences, University of Tehran, Tehran, Iran https://orcid.org/0000-0001-9553-5478
Ezzatollah Abbasian Associate Professor, Department of Accounting and Financial Sciences, University of Tehran, Tehran, Iran Author https://orcid.org/0009-0002-2361-629X

Keywords:

modern technologies, mixed-integer linear programming, big data analytics, artificial intelligence, cost accounting, informationalism, Iraqi industrial companies, managerial efficiency

Abstract

International Financial Reporting Standard 17 (IFRS 17), as the most significant transformation in the financial reporting of insurance contracts, provides a new framework for the recognition, measurement, presentation, and disclosure of insurance contracts. Despite the potential benefits of this standard in enhancing transparency, comparability, and the quality of financial information, its implementation in the insurance industry, particularly in the life insurance sector, is associated with numerous challenges. The present study aimed to investigate the challenges of implementing IFRS 17 in Iran’s life insurance sector and to propose appropriate solutions for addressing these challenges. In terms of purpose, this was an applied study, and methodologically, it adopted a mixed-methods, qualitative–quantitative design. In the quantitative phase, data were collected through a researcher-developed questionnaire completed by 180 financial managers, auditors, actuaries, insurance industry experts, and information technology specialists. In the qualitative phase, 15 focus-group sessions were conducted with insurance industry experts, representatives of the Central Insurance of Iran, and members of the research team. Quantitative data were analyzed using descriptive statistics and the one-sample t test, while qualitative data were examined through content analysis. The findings indicated that the most important financial reporting issues in the insurance industry included the absence of a comprehensive accounting standard for life insurance, weaknesses in insurance contract measurement methods, inadequate requirements concerning technical provisions, insufficient separation of insurance activities from investment activities, limited risk disclosure, and deficient information infrastructures. Furthermore, the implementation of IFRS 17 was found to face challenges such as the absence of implementation guidance, limited training and specialized expertise, inadequate information systems, insufficient actuarial capacity, legal and regulatory ambiguities, extensive reliance on professional judgment, high operating costs, and the country’s prevailing economic conditions. The findings also demonstrated that issues relating to the level of aggregation of contracts, discount rates, risk adjustment, and the variable fee approach were among the most challenging requirements of the standard. Accordingly, the development of national implementation guidance, expansion of specialized training, coordination among regulatory institutions, enhancement of information systems, reinforcement of supervisory mechanisms, and modernization of the actuarial profession were identified as the most important proposed solutions. The findings of this study may provide a foundation for policymaking and planning aimed at the successful implementation of IFRS 17 in Iran’s life insurance industry.

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