The insurance  industry globally will likely incur about $US15-20 billion  ($19.4-25.8 billion)  in  cumulative  costs to make the transition to IFRS 17, a new accounting rule that comes  into effect on January 1 2023, according to a survey of 312 insurers  by Willis Towers Watson.

The broker  says the average  program  cost  for  the 24  largest multinationals  is  $US175-200 million  ($225.9-258.2 million)  each, and  $US20 million  ($25.8 million)  each for the remaining 288 insurers.

“This is an extraordinary figure that will naturally lead to many questions from boards and investors,”  Global IFRS 17 Advisory Leader Kamran  Foroughi  said.  “For many, significant improvements will also be required in business processes and finance operations to deliver IFRS 17 efficiently and link with other metrics."

“With smart investment and the right people, an insurer’s IFRS 17  program  has the potential to help deliver long-term annual savings to show against the daunting up-front costs.”

International Financial Reporting Standard 17  (IFRS 17),  one of the most significant revamps made to insurance accounting in more than 20 years, was  issued in May 2017 by the International Accounting Standards Board.

It replaces IFRS 4, an interim measure that resulted in insurers using different accounting standards.

When  IFRS 17 is  implemented, insurance contracts will be accounted for in a consistent manner globally, making it easier to compare performance.

In Australia, the  new standard is issued as AASB 17 by  the  Australian Accounting Standards Board.

Willis Towers Watson says since its last survey in June last year,  clear progress has been made in areas  such as data and IT  workstreams.

However  setting up a robust process designed to comply with tight reporting schedules remains a challenge, the broker says.

The survey also found more than 10,000 full time-equivalent  employees will be required to deliver IFRS 17.

“This presents major challenges for insurers’ recruitment and retention strategies, both within and beyond their IFRS 17 programs,” the broker says.

Additionally  the proportion of insurers with a good understanding of the  business implications of IFRS 17  has improved to 17% from 6% last year.