Has IFRS 17 Improved Comparability? Yes. But the Journey Is Not Over

Has IFRS 17 Improved Comparability? Yes. But the Journey Is Not Over

One of the principal objectives of IFRS 17 was to improve the comparability of insurers' financial statements. Several years after implementation, it is becoming clear that the industry has taken a significant step in that direction.

However, comparability is more complex than applying a common accounting standard. While IFRS 17 has established a much more consistent measurement framework, comparing insurers in practice still requires careful interpretation and professional judgement.

One of the most visible improvements is the top line.

Under IFRS 4, what appeared to be the same metric often represented very different concepts. For many non-life insurers, the headline figure was Gross Written Premium (GWP) or Gross Earned Premium. Among life insurers with significant unit-linked business, practice was less consistent. Some continued to present GWP prominently, while others reported only the fees earned for insurance and investment-management services, excluding the investment component of premiums.

As a result, even insurers with broadly similar products could present very different top-line measures. Comparing "revenue" between companies often required first understanding what each company had chosen to include.

IFRS 17 fundamentally changed this. Insurance revenue is now built on a common principle: it reflects the insurance services provided during the reporting period rather than premium cash flows. Business models remain different, but the underlying concept has become far more consistent, giving investors, analysts and regulators a much stronger basis for comparing operating performance.

Yet every improvement comes with trade-offs.

Gross Written Premium was never designed to measure profitability, but it provided an intuitive measure of business volume and market presence. It answered a simple question: how much business is an insurer writing?

Under IFRS 17, GWP has largely moved outside the primary financial statements. Many insurers continue to disclose it voluntarily, or because regulators, industry associations, taxes or levies still rely on it, but it no longer occupies the prominent position it once did.

This reflects an important shift. IFRS 17 prioritizes measures that better represent economic performance, even if some familiar operational indicators become less visible.

Has this solved comparability?

Not entirely.

Anyone who has compared financial statements across multiple insurers quickly discovers that differences still emerge.

Companies make different presentation choices within the flexibility permitted by the standard. Some provide extensive disaggregation and detailed reconciliations, while others present more condensed information. Similar concepts may be described using different terminology. Accounting policy elections, such as the presentation of insurance finance income or expense in profit or loss or partly through other comprehensive income, can affect how results are interpreted. Segment disclosures also vary considerably in both structure and level of detail.

Comparability also depends on the professional judgement applied before the financial statements are prepared. Different approaches to determining discount rates, methodologies for calculating the risk adjustment, coverage units, levels of aggregation and the identification of investment components may all comply with IFRS 17 while producing different reported outcomes. The standard narrows the range of acceptable practice, but it does not eliminate professional judgement.

The balance sheet presents similar challenges.

IFRS 17 introduced a more consistent measurement framework for insurance contract assets and liabilities. At the same time, some information that users previously saw prominently on the face of the balance sheet may now be embedded within broader balances or explained through note disclosures.

Insurance receivables illustrate this point. Historically, they often appeared as a distinct balance-sheet line, giving users an immediate indication of premium collection exposure. Today, depending on the nature of the receivable and the reporting approach, that information may be split between insurance contract balances and separate receivables accounted for under IFRS 9. The information is still there, but finding it often requires moving between the primary statements and the notes, and the way it is presented is not always consistent from one insurer to another.

There are also limits that no accounting standard can overcome.

Life, non-life, health and takaful insurers operate under fundamentally different business models. Product mixes, risk profiles and operating strategies differ significantly. IFRS 17 was never intended to remove these genuine economic differences, nor should it.

Perhaps the most important lesson is that IFRS 17 has standardized measurement far more than it has standardized communication.

Financial statements today are undoubtedly more comparable than they were under IFRS 4. Yet meaningful comparisons still depend on understanding accounting policies, interpreting disclosures and, in many cases, considering complementary operational measures such as Gross Written Premium, policy volumes or other business indicators that remain important to users.

This should not be viewed as a shortcoming of IFRS 17. Rather, it reflects the natural limits of accounting standards.

Accounting standards can standardize recognition, measurement and presentation. They cannot remove every judgement involved in telling a company's financial story, nor should they.

IFRS 17 has given the industry a common accounting language.

The next step in improving comparability may lie not in changing how insurers measure their results, but in continuing to enhance the consistency, clarity and accessibility of financial reporting.

Ultimately, comparability is not achieved by accounting standards alone. It is achieved when high-quality standards are complemented by thoughtful presentation, meaningful disclosures and a shared commitment to helping users understand the business behind the numbers.

Disclaimer: This article is intended for general information and discussion purposes only and does not constitute accounting, actuarial, audit, legal or other professional advice. The views expressed are those of the author and are based on professional observations and experience. Readers should consider the specific facts and circumstances of their own organizations and seek appropriate professional advice before making decisions based on the matters discussed.