IFRS-17 is ‘done.’ Are insurers’ financial leaders running on empty?

Advisors to property and casualty insurers are seeing signs of the P&C industry’s financial people burning out after a gruelling period of implementing the new IFRS-17 accounting standards, a tax expert observes.

And so, companies may wish to pause before throwing their people into the breach of confronting the strategic implications of new Environmental, Social and Governance (ESG) regulations, he said.

“We…know that with some of the conditions in the market, we are seeing less hiring and less jobs in general. And that’s also tied with pretty high employee burnout,” said Bobby Thompson, speaking at the 2024 IBC Financial Affairs Symposium in Toronto. Thompson, a partner at KPMG Canada, specializes in advising on insurance accounting and audit.

“You might remember last year I was up on a panel here [at the 2023 IBC Financial Affairs Symposium],” he continued. “I had three CFOs/VPs up here, and they looked like they were going to fall asleep on stage. Not because they weren’t interesting — it was a very riveting panel — but they were so tired because we were two days since we had pushed the button on [last year’s] capital filing. I looked like I was going to fall asleep, so I’m not calling out anybody.

“The burnout is real in the market. People are tired. People just spent a lot of effort on IFRS-17 And now they’re hearing guys like [fellow IBC Financial Affairs Symposium panellist and KPMG advisor] Steven [Smith] talk about Day 2 improvements [to the new IFRS-17 metrics]. And they’re saying, ‘Day 2 improvements? We just got here, what are you talking about?’”

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Companies may want to think twice before moving some of their financial people from the IFRS-17 file into similarly intensive projects such as strategizing around ESG, Thomspon said. Companies are turning their minds to ESG. And, like IFRS-17, ESG will be heavily compliance-based.

For example, he noted Canada’s P&C insurance industry does have ties to high-emission sectors such as the auto and auto repair industries. And so, based on the Office of the Superintendent of Financial Institution’s new regulatory guidelines around climate change, financial leaders at insurance companies will have an important role to play in ESG strategies.

But that may be become an HR issue, given all of the recent work done around IFRS-17, Thompson cautioned. He said IFRS-17 work is still not complete, since more work needs to be done around making the process shorter, less cumbersome and less manual-intensive.

“We are seeing initiatives [at the companies] to improve employee engagement [and manage] burnout,” he said. “One of the things we can do is either bring those employees who worked on IFRS-17 back into the business as usual, or we can engage them on another project.

“And that’s a big debate I’ve seen among the HR functions of the companies I work with. Because moving [their financial leaders] to ESG right away could be the straw that just breaks the back, right? That just could be one project too much. So really, on an employee-by-employee basis, people are managing that.”

 

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