The Malta Financial Services Authority (MFSA) has issued feedback following its assessment of how insurance undertakings approached the implementation of IFRS 17.
The Malta Financial Services Authority (MFSA) has issued feedback following its assessment of how insurance undertakings approached the implementation of IFRS 17. Drawing on observations from supervisory engagement, the Authority outlined examples of good practice and identified areas where improvements are still expected.
The communication serves as a reference point for insurers to fine-tune their processes, reporting, and internal governance now that the new standard is in effect.
Implementation Observations
- Governance and Oversight
Most undertakings established project structures and steering committees to oversee the implementation of IFRS 17. However, in some cases, the level of board engagement and documented oversight was limited. The MFSA expects boards to remain actively involved, particularly when assessing the effect of the standard on business strategy, financial reporting, and capital planning.
- Methodology and Data
The measurement models applied varied across undertakings, with many adopting the Premium Allocation Approach (PAA) where eligible. While most insurers were able to justify their model selection, the MFSA noted inconsistencies in the level of documentation supporting these decisions. Clear internal records of judgements, assumptions, and the rationale for classification are considered essential.
- System Changes and Integration
While implementation efforts generally involved updates to systems and processes, some firms relied on manual workarounds due to system limitations. The Authority stressed the importance of moving towards more robust, automated solutions to reduce operational risk and support timely reporting.
- Disclosure and Communication
There were instances where the first-year disclosures lacked sufficient detail or failed to clearly explain the transition impact. The MFSA expects future reporting to be more transparent, with narrative disclosures that help stakeholders understand the drivers of change in performance and equity.
MFSA's Expectations Going Forward
The MFSA has encouraged insurance undertakings to:
- Review and refine their internal documentation, particularly in relation to model selection and accounting estimates
- Ensure that governance structures provide for ongoing oversight of IFRS 17 compliance and reporting quality
- Continue investing in systems that support the end-to-end reporting process
- Strengthen internal training and board awareness, especially around interpretation and use of IFRS 17 information
- Enhance the clarity and quality of disclosures in financial statements
The introduction of IFRS 17 has required substantial effort
across the insurance sector. While the transition is
now complete, supervisory expectations remain high. Firms are
encouraged to review their implementation outcomes in light of the
MFSA's feedback and take steps to address any remaining
gaps.
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