IC moves deadline for firms’ adoption of new accounting standard to 2027
ALL INSURERS and reinsurers in the Philippines are required to adopt the latest financial reporting standards for their audited financial statements within the next two years, the Insurance Commission (IC) said.
All insurance companies must adopt the Philippine Financial Reporting Standards 17 (PFRS 17) in their audited financial statements by Jan. 1, 2027, the IC said in a circular dated March 11.
The deadline for compliance was moved from the original Jan. 1, 2025 implementation date.
“The Commission recognizes the need by insurers and reinsurers for additional time to prepare for the adoption of PFRS 17 in the presentation of their solvency reports. This will also allow the commission, the Securities Exchange Commission, the Financial and Sustainability Reporting Standards Council and the Professional Regulatory Board of Accountancy more time to ensure the effective, proportionate, and well-coordinated adoption of the new accounting framework,” Insurance Commissioner Reynaldo A. Regalado said in a statement late on Tuesday.
“At any rate, insurers and reinsurers are not precluded from adopting PFRS 17 as early as this year.”
The International Accounting Standards Board (IASB) in 2017 prescribed International Financial Reporting Standard (IFRS) 17 for insurance contracts. The standards provide updated principles for the recognition, measurement, presentation and disclosure of insurance contracts in firms’ financial statements.
PFRS 17 is the local adoption of the IFRS 17 as approved by the IASB in 2018.
“The new accounting standard introduces a more uniform and transparent approach to determine insurance contract liabilities using current values and risk adjustments,” the IC said.
Under the new circular, insurers and reinsurers will be required to submit by April 30, as part of their 2024 annual statements, reports outlining the status of their implementation of the PFRS 17 and affidavits of undertaking to declare their commitment to adopt the new accounting standard.
They will also need to submit quarterly implementation status reports, which cover preparatory activities; overview of implementation risks, challenges, and issues encountered; an assessment of PFRS 17 preparedness; and their PFRS 17 accounting policies.
Insurers are also required to turn in quantitative impact assessment reports.
“The commission views that the eventual institutionalization of PFRS 17 will ensure prudential stability and sustainable growth. It will also consequently afford the insuring public sustained, if not increased, protection and confidence,” Mr. Regalado said.
The insurance industry’s combined premium income rose by 12.81% year on year to P440.39 billion in 2024, driven by the life sector, IC data showed. Its net income grew by 15.88% year on year to P56.29 billion. — A.M.C. Sy
