b'INSURANCE REGULATORY|ASIAnoting that the ultimate aim of IFRS 17 is to achieveReinsurance gives rise to another complication for P&C consistency and comparability globally. As ainsurers, with most assuming their coverage can be principles-based accounting system, insurers havemodelled using the simplified approach. However, some latitude to apply their own interpretations12-month reinsurance contracts written on the last day without a need to follow specific rules that haveof the risk-attaching policy are not automatically been set out. This gives rise to the risk ofeligible for the simplified treatment. Further differences in the reporting by insuranceperplexing the matter, policies that are grouped under companies, thus affecting its comparability. IFRS 17 may not fall within the same reinsurance Throughout Asia, there is a widespread assumptionstructure. This makes it difficult for insurers to monitor by P&C companies that short-duration policies arethe risk-mitigation effects. As of May 2020, 10% of the eligible for IFRS 17s simplified premium allocationinsurers in the APAC region had not even began their approach. Contracts with a coverage period of 12preparation for IFRS 17, a process that would take an months or less automatically qualify for theestimated 42 months to complete.simplified approach and most general insurance policies would fit the bill. For any portfolios thatSingaporeoffer longer coverage, they would need to demonstrate their eligibility by running both measurement models, proving that the resultsReviewing of the Asset, Liability generated do not differ significantly between theExposure Reporting by the MAStwo models to ensure the liability for remainingIn November 2012, the Monetary Authority of coverage calculation is comparable. This is likely toSingapore (MAS) introduced Notice 122 on Asset affect a range of policies with longer duration, such& Liability Exposures for Insurers, creating a review as engineering and construction risks or mortgagemechanism that enabled the MAS to review insurers insurance, title and other similar products. asset and liability exposures and to better identify Even if most P&C companies qualify for theand oversee the emerging risks and weaknesses in simplified approach, insurers may still need to runthe Singapore insurance sector.the more complex general measurement modelIn its announcement dated November 5, 2021, the being put forth by IFRS 17. Most insurers in theMAS explained its intention to implement changes P&C industry are assuming they will be able to useto its review mechanism. The MAS proposed to the simplified approach and appear not to beremove certain reporting conditions related to carrying out much eligibility testing to actuallyderivatives while remodeling other information prove their eligibility. As insurers need to producerequests from insurers. Furthermore, the MAS comparative IFRS 17 numbers from January 1,proposed to collect additional data relating to 2023, it may be too late for some to demonstrateCollective Investment Schemes, investment-linked eligibility and many are developing proxies for thepolicies and currency exposure.complex model using adjusted combined ratios or discounted loss ratios instead.112|Global Insurance Industry Year in Review 2021'