Project Initiation Plan UKEB Post-implementation Review of IFRS 17 Insurance Contracts

Purpose

1This paper sets out the plan to conduct a UKEB Post-implementation Review of IFRS 17 Insurance Contracts (UKEB PIR of IFRS 17).

2At the time of writing this paper, the IASB has not indicated when it expects to conduct its post-implementation review (PIR) of IFRS 17 Insurance Contracts.

Background

IFRS 17

3The primary objectives of the IASB's project to develop IFRS 17 were to make:

1. insurance companies' financial statements more useful to investors and other users of financial statements; and
2. insurance accounting more consistent across jurisdictions and products.

4IFRS 17 replaced IFRS 4 Insurance Contracts. It established principles for the recognition, measurement, presentation and disclosure of insurance contracts (which IFRS 4 did not prescribe). IFRS 4 permitted entities to use a wide variety of national accounting practices, which were not necessarily comparable with each other. Amongst other things, this meant that, for groups with international subsidiaries, the financial position and performance of subsidiaries would not necessarily be reflected in the group accounts on a consistent basis.

5IFRS 17 was issued by the International Accounting Standards Board (IASB) in May 2017. It was subsequently amended in June 2020 and in December 2021. Its effective date was 1 January 2023.

Endorsement and adoption of IFRS 17 for use in the UK

6The UKEB considered the amended version of IFRS 17 for adoption during 2021 and 2022. The UKEB approved the adoption of IFRS 17 for use in the UK on 16 May 2022.

UKEB PIR

PIR of IFRS 17

7When adopting a standard for use in the UK, the UKEB needs to assess whether it is likely to lead to a 'significant change in accounting practice'. When the UKEB concludes this threshold is reached, it is subject to the requirements in paragraph 3 of Regulation 11 of SI2019/685 which requires the UKEB to:

1. carry out a review of the impact of the adoption of the standard; and
2. publish a report setting out the conclusions of the review no later than 5 years after the date on which the standard takes effect (being the first day of the first financial year in respect of which it must be used).

8The report will outline the main findings of the PIR. It will not alter or affect the endorsement and adoption decision made by the UKEB in 2022.

Significant Change in Accounting Practice

9At the time of adopting IFRS 17 (in May 2022), the Endorsement Criteria Assessment (ECA) did not include the UKEB's preliminary view as to whether the implementation of IFRS 17 would lead to a 'significant change in accounting practice'. This is because the UKEB's Due Process Handbook¹, which sets out the need to incorporate this information in the ECA, was not in place at the time of the Board's decision to adopt IFRS 17.

10The finalised UKEB DPH, published on 8 December 2022, included a requirement that future DECAs and ECAs include the Board's preliminary view on this criterion.

11During the development of the ECA, the Board considered that a number of different aspects of IFRS 17 were likely to lead to a significant change in accounting practice. After the adoption of IFRS 17, the Board provided a clarification of its view that IFRS 17 meets this criterion by making a statement on the UKEB website that specified the UKEB “will carry out a review of the impact of the adoption of the standard and a report setting out the conclusions of this review will be published by the UKEB by 1 January 2028”.

12We consider that this decision still holds and that no matters have arisen to contradict it.

Guidance

Government

13The objective of a UKEB PIR is to assess the impact of the adoption of an international accounting standard. The UKEB currently is not required to apply the UK Government's guidance on PIRs. However, as conducting PIRs is part of the UKEB statutory requirements, considering the Government guidance in this area ensures that the UKEB adheres to best practice in the UK public sector.

14The Government's Better Regulation Framework (BRF)² provides guidance on how to conduct impact assessments and PIRs³. Accordingly, the UKEB PIR of IFRS 17 will be developed to be broadly in line with the guidance for PIRs set by the BRF as well as the principles of best practice of the Department of Business and Trade (DBT)⁴.

IASB

15At the time of writing this paper, the IASB has not indicated when it expects to conduct its PIR of IFRS 17. The IASB is required to conduct a PIR of each new accounting standard under its Due Process Handbook⁵. The timing of the PIR is usually after the new requirements have been applied internationally for two years, generally 30-36 months after the effective date.

16The objective of an IASB PIR is to “assess whether the effects of applying the new requirements on users of financial statements, preparers, auditors and regulators are as intended when the IASB developed those new requirements”. The IASB will usually publish a request for information to obtain stakeholder feedback. When the IASB has finished its deliberations, it publishes a report of its findings. When matters are identified in a PIR the IASB considers whether to take any action and the relative prioritisation of those matters⁶.

Purpose of UKEB PIR of IFRS 17

17The primary focus of this UKEB Post-implementation Review (PIR) is to assess whether the endorsement and adoption of IFRS 17, for application by UK companies, had the intended effect. When adopting a standard for use in the UK, the UKEB assesses whether:

1. the standard meets the technical accounting criteria of understandability, relevance, reliability and comparability;
2. the use of the standard is likely to be conducive to the long term public good in the UK; and
3. the standard is not contrary to the principle that the accounts must give a true and fair view.

18The UKEB will take a holistic approach to the PIR, which is consistent with its approach to the original endorsement and adoption of IFRS 17. The UKEB will consider the standard as a whole, including the disclosures it requires and its interaction with other UK-adopted international accounting standards. As a minimum, the following questions will be considered:

1. The extent to which UK users and other stakeholders consider the information provided by the application of IFRS 17 useful (e.g. whether users find the information useful, comparable, relevant, etc.).
2. Whether the adoption of IFRS 17 for use in the UK led to any observable capital market effects.
3. The extent to which there are issues that could be addressed through a future PIR of IFRS 17 by the IASB.
4. The prevalence and order of magnitude of implementation costs among UK preparers, both one-off and ongoing.
5. Whether any other intended or unintended wider economic effects could be observed in the UK as a result of the adoption of IFRS 17.

19The UKEB will broadly follow government guidance⁷ on conducting post-implementation reviews to align with best practice in the public sector.

20The UKEB PIR of IFRS 17 is expected to commence ahead of the IASB's PIR. The output of the UKEB PIR will be used to influence the IASB's PIR.

Due process for PIR

21Section 8 of the UKEB Due Process Handbook (DPH) sets out the requirements for a UKEB PIR. The process is split in two phases. In summary:

1. Phase one: the UKEB sets out the scope of the PIR, undertaking the following steps:
   1. Project initiation plan (PIP) (mandatory).
   2. Desk-based research.
   3. Initial consultation (mandatory).
   4. Publication of a request for information (mandatory) with a 90-day consultation period.
2. Phase two:
   1. Outreach activities (mandatory).
   2. Publication of final report (mandatory) and a due process compliance statement (mandatory).

22The content of the report includes:

1. an overview of the UKEB PIR process and its timeline;
2. background information to the international accounting standard under review;
3. a summary of the evidence gathered and findings;
4. a summary of the outreach activities and sources of stakeholder comments (after publication of the request for information); and
5. the UKEB's conclusions from the review.

23The outreach undertaken to collect evidence may gather a number of post-implementation issues, some of which may not relate to the UK. The report will focus solely on significant UK post-implementation issues, if any.

Project Plan

Proportionality Assessment

24This is the UKEB's first PIR for a standard that it has adopted for use in the UK. Previous UKEB PIR projects focused on influencing the IASB's PIRs.

25This consideration will affect the proportionality assessment, as noted in the paragraphs that follow.

Significance and Size

Entities Affected by the Proposals

26IFRS 17 affects entities that issue insurance contracts, most typically insurance undertakings.

27The insurance industry is strategically important to the UK economy, for example:

1. The UK insurance industry is the largest in Europe and the third largest in the world⁸. Data from the Bank of England indicates that the total value of Gross Written Premiums (GWP)⁹ of UK insurance companies was approximately £350 billion, as of 2024¹⁰.
2. UK insurance undertakings manage a significant amount of assets. The Association of British Insurers reports that the UK insurance sector manages investment of over £1.8 trillion¹¹, nearly 20% of UK households' net assets¹².

28IFRS reporters are an important share of the industry.

1. A total of 17 insurance entities were listed on the London Stock Exchange as of December 2025¹³. These entities are required to produce consolidated accounts using IFRS. The total market capitalisation of these listed insurers was approximately £105 billion as of December 2025¹⁴.
2. An additional 28 unlisted entities voluntarily apply IFRS. These entities were identified as part of the Endorsement Criteria Assessment of IFRS 17, which was published in May 2022.
3. The total insurance revenue of entities applying IFRS was just short of £100 billion as of 2024 year-end.

29Table 1 below provides a further breakdown of insurance revenues by size and listing status.

Table 1: Revenue of insurers that apply IFRS in the UK

Note: This analysis is based on the population of unlisted entities that was identified as part of the ECA of IFRS 17, which was published in 2022.

Complexity

30IFRS 17 introduced complex requirements for entities reporting insurance contracts.

31As noted in the Endorsement Criteria Assessment (ECA) of IFRS 17, this is because the underlying economics of these transactions is complex. Insurance contracts create a variety of complex bundles of rights and obligations for the issuers. Insurance entities also typically use complex actuarial methodologies and assumptions to price insurance policies and estimate the cost of claims.

32To account for such contracts, IFRS 17 introduced three measurement models, as well as a number of accounting policy choices and transition approaches to reflect the diverse and complex business of insurance entities.

Expected Timeline

33As set out above, the UKEB is required to undertake the PIR and publish a report setting out the conclusions of the review no later than 5 years after the date on which the standard takes effect (being the first day of the first financial year in respect of which it must be used) i.e. by 1 January 2028 for IFRS 17.

34The UKEB considers that initiating the project at this time will help raise awareness amongst stakeholders, accommodate the lead time necessary to commission an external report and allow for contingency within the timeline.

35The planned project timeline is set out below (see paragraphs A46–A47).

Expected Interest

36The UKEB anticipates interest in this project mainly from insurance entities, their shareholders/investors as well as accounting firms and institutes.

37Another element which may provoke interest among our stakeholders is that this is the UKEB's first PIR.

UKEB Project Scope

38Based on the proportionality assessment above, the UKEB regards this as a 'Significant' project, and the scope and approach described in this document is based on this preliminary assessment.

39The scope of the project may be reassessed at a future date based on desk-based research and stakeholder engagement.

Resources Allocated

40To undertake the activities described in this project plan, a project team has been assigned consisting of a Project Director with oversight of Senior Project Director.

41The economics team will actively contribute to the project, considering that the PIR will focus on both accounting and economic impacts.

Setting up an ad-hoc advisory group

42It is expected that the Project Director and the Economics Team Leader will jointly:

1. Supervise the drafting of the external report.
2. Conduct stakeholder engagement.
3. Draft the final PIR report.

43The endorsement and adoption project for IFRS 17 was supported by an ad-hoc advisory group as, at that stage, the UKEB had not set-up its Advisory and Working Groups. For this project, we do not propose setting up another group. Instead, the UKEB can benefit from:

1. Input from existing Advisory and Working Groups.
2. Stakeholder feedback from outreach activities.
3. The stakeholder network built during the endorsement and adoption activities for IFRS 17.

44Moreover, there is a better understanding of the technical matters arising out of IFRS 17 now, given that three full years of implementation have passed and a number of reviews have been conducted by regulators, accounting firms and accounting institutes, etc.

Project activities and timeline

45The proposed high-level project timeline, including activities, is shown below. This provides a best estimate based on information known at this time. If necessary, a revised PIP will be presented to the Board, to reflect any major changes, as the project progresses.

46Future dates are based on current expectations and may therefore be subject to modification. The Secretariat will bring a revised PIP to the Board if there are any significant changes to the project plan.

47Table 2: Project activities and timeline¹⁵

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