IFRS 17 In Practice

One actuary’s look at evaluating financials to drive informed decisions

BY JESSE RESNICK April 2026

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International Financial Reporting Standard 17 (IFRS 17), as detailed by the IFRS Foundation, marks the most significant transformation in insurance financial reporting in decades. For insurers in IFRS 17 jurisdictions (which include at least 169 countries), implementation may feel complete, but in my experience, many stakeholders (such as investors) are only now encountering IFRS 17 financials. Their reactions have included confusion and questions like, “Where’s my premium?”

IFRS 17 has redefined how insurance revenue is presented and recognized under Generally Accepted Accounting Principles (GAAP). This redefinition may be challenging to grasp, particularly for stakeholders who equate revenue with cash received. In accounting, however, revenue is recognized when performance obligations are fulfilled, not when payment is collected.

Under the previous standard, IFRS 4, insurance revenue was typically total premiums received. However, for long-term contracts, a premium paid today may relate to services over many years. IFRS 17 spreads profit recognition over time and requires immediate loss recognition, better reflecting insurance contract economics.

Insurance revenue now includes expected benefits and claims, as well as directly related expenses. This is possibly the most profound change IFRS 17 has brought about: Insurance revenue now relies heavily on actuarial projection models, reflecting closer integration between actuarial and accounting functions. Insurance expenses reflect actual incurred benefits and claims, along with related costs. Expenses not directly tied to insurance service are excluded from reserves and reported separately.

Expected benefits/claims are now part of revenue—which seems counterintuitive, but aligned with IFRS 17’s service-based focus. Actual benefits/claims are part of expenses, which now combine benefits/claims and related costs in a single Profit & Loss statement (P&L) row. Profit is deferred, and losses are recognized up front via the Contractual Service Margin (CSM) and Loss Component (LC). Revenue reflects expected service, not cash.

The Premium Allocation Approach (PAA) simplifies valuation for short-duration contracts. However, premiums still aren’t reported directly, and benefits/claims and expenses are combined, making insights harder to extract for short-term business, where current-period cash flows dominate performance.

THEORY MEETS PRACTICE FOR LONGER-TERM INSURANCE

For me, IFRS 17 has a strong theoretical appeal for long-term contracts, despite practical hurdles. Insurance results are expressed as expected profit plus the impact of other intuitive items such as experience gains, basis changes and loss-making new business. This presentation contrasts with IFRS 4, under which results were often more closely aligned with cash flows and where changes in reserves played a significant role in reported income. Actuaries relied on company-specific Reserve Movement Analysis (RMA) and Sources of Earnings (SOE) analysis to explain results.

The IFRS 17 P&L is streamlined, while the Roll Forward statement drills down into the P&L under an RMA/SOE-like standardized approach.

PRACTICAL UNDERSTANDING USING KEY PERFORMANCE INDICATORS (KPIS)

To interpret and compare IFRS 17 results, MSA Research, an independent analytical research firm whose parent company, Valani Global, employs me, formed a Life & Health KPI Committee in 2024 that focused on Canada’s insurance industry.

The committee worked through 2025 to develop common metrics. Simplicity was key (as one member said, “KPIs are like jokes. If you need to explain them, they’re not good.”) The committee included insurers, reinsurers, auditors, consultants, associations, tech firms and regulators. Several international regulators observed the work.

Candidate KPIs were proposed, reviewed and voted on monthly. Accepted KPIs were formalized using statutory financial data and shared with participants. Canada’s use of IFRS 17 for statutory reporting enables standardized templates, allowing consistent, centralized KPI production. These metrics were designed to align with commonly cited IFRS 17 objectives: comparability, transparency, consistency and faithful representation.

Although focused on Life & Health, the MSA Research committee built on earlier work by Canada’s property and casualty (P&C) industry, which indicates that IFRS 17 poses unique challenges for P&C, even with the PAA available, some practitioners observe that IFRS 17 aligns more naturally with long-term Life & Health business. Aspects of the standard, such as the requirement to combine claims, benefits, and related expenses into a single “insurance service expenses” line, align well with long‑term products, where annual cash‑flow patterns are less critical to lifetime profitability.¹

For P&C insurers, however, single‑year cash flows typically drive product performance and are essential to understanding results. The inability to separately present claims and expenses under IFRS 17 can therefore obscure meaningful drivers of short‑term profitability, which can make short-duration performance drivers less visible under the standard. Nevertheless, KPIs such as the “Net Insurance Service Ratio” detailed later were developed to improve understanding of IFRS 17 for P&C insurers.²

The forthcoming IFRS 18 standard (effective for annual reporting periods beginning on or after January 1, 2027, with earlier application permitted) will introduce “management-defined performance measures,” which resemble KPIs and aim to enhance transparency and comparability, continuing the trend toward more meaningful, standardized performance reporting.

From implementation to insight

IFRS 17 implementation required intensive collaboration across actuarial, accounting and IT teams for most individuals. That phase may be mostly done, but the next challenge, I believe, is just beginning. The industry can now evaluate IFRS 17 financials to drive better decisions. This has the potential to support more informed decision-making across the industry.

We’ll now explore a few illustrative KPIs developed by the committee, using benchmark data from Canadian Life & Health insurers. The KPIs that follow represent one analytical approach and are not intended as industry standards or as endorsements by the Society of Actuaries (SOA).

KPI: New CSM to Total Starting CSM

This KPI measures the ratio of Contractual Service Margin (CSM) from new business to the starting CSM. As deferred underwriting profit, the CSM is arguably IFRS 17’s most important concept. CSM growth is a vital lens for understanding long‑term insurance business growth, complementing familiar metrics such as new business value, sales and premium trends. Keep in mind, premiums/sales are no longer in the consolidated financial statements under IFRS 17.

This indicator reflects how fast deferred profit is accumulating. It requires data from multiple Roll Forward pages. All data are net of reinsurance.

New CSM to Total CSM

Benchmark	2024	2023
Total Life & Health	10%	10%
Big 3	11%	11%
Non-Big 3	10%	8%
Bank-owned	10%	N/A
Reinsurers	-1%	3%

The L&H sector shows steady CSM growth, indicating consistent new business and disciplined underwriting. The Big 3 report slightly lower ratios, which may reflect factors such as scale, distribution and product mix. The Non-Big 3’s rise from 8% to 10% may signal improved competitiveness or strategic shifts. Banks are at 10%, though missing 2023 IFRS 17 data limits trend analysis. Reinsurers show a lower average and negative growth in 2024, warranting further examination.

KPI: Net Insurance Service Ratio (NISR)

This KPI compares net insurance service expenses to revenue, akin to a P&C-style “combined ratio.” All data are net of reinsurance.

Traditionally, combined ratios may be split into “loss” and “expense” ratios. Under IFRS 17, however, benefits/claims and expenses are merged into “insurance service expenses,” making it hard to isolate components.

NISR is a short-term metric focused on current-year performance. While especially relevant for P&C, it also offers insight into L&H underwriting. Similar ratios can be calculated on gross and ceded bases using only the P&L, with further breakdowns available in the Roll Forward.

Net Insurance Service Ratio

Benchmark	2024	2023
Total Life & Health	87%	86%
Big 3	85%	85%
Non-Big 3	89%	88%
Bank-owned	89%	N/A
Reinsurers	99%	95%

A lower NISR indicates more efficient underwriting. At 85%, the Big 3 outperform the market, likely due to scale, pricing and efficiency. The Non-Big 3 and banks sit at 89%, suggesting higher costs or less favorable mix. Reinsurers’ increase from 95% to 99% implies nearly all revenue is consumed by service expenses, leaving little margin.

KPI: CSM, Risk Adjustment and Loss Component as % of Liabilities

These KPIs assess key IFRS 17 technical provisions, normalized for company size. They offer insight into stability within and variability across groups and help benchmark provision calibration across direct, ceded and net business. All data are net of reinsurance.

Contractual Service Margin as % of Non-PAA Insurance Liability

Benchmark	2024	2023
Total Life & Health	7%	7%
Big 3	6%	6%
Non-Big 3	9%	10%
Bank-owned	7%	N/A
Reinsurers	26%	43%

Non-Big 3 insurers show higher CSM ratios, suggesting richer margins or more profitable business. The drop from 10% to 9% may indicate pressure or recalibration. Banks at 7% align with the market, reflecting a balanced approach. Reinsurers’ CSM ratio, though higher, dropped sharply from 43% to 26%, likely due to thinner margins and the dynamic nature of reinsurance driving yearly mix-of-business and retrocession changes.

Risk Adjustment as % of Total Insurance Liability

Benchmark	2024	2023
Total Life & Health	4%	5%
Big 3	4%	4%
Non-Big 3	5%	6%
Bank-owned	5%	N/A
Reinsurers	27%	43%

The Big 3’s steady 4% suggests mature modeling and a stable mix. Slightly higher adjustments for Non-Big 3 and banks may reflect more volatile portfolios or conservative assumptions. Reinsurers’ drop from 43% to 27% could reflect runoff, assumption changes or strategic shifts. Their risk adjustments remain higher than direct writers, unsurprisingly, given exposure to tail risks and volatility.

Loss Component as % of Total Insurance Liability

Benchmark	2024	2023
Total Life & Health	0%	0%
Big 3	0%	0%
Non-Big 3	1%	1%
Bank-owned	1%	N/A
Reinsurers	5%	5%

Minimal-loss components suggest that most long-duration contracts are expected to be profitable or break-even. Non-Big 3 and banks show a modest 1%, indicating some exposure to loss-making contracts. Reinsurers’ steady 5% signals small but persistent exposure to onerous treaties, which may reflect a range of factors, including adverse development, pricing dynamics or portfolio mix.

In closing

As IFRS 17 reporting matures, how we present and interpret results will evolve. There’s still room to improve data, especially in Canada and jurisdictions early in adoption, and to prepare for IFRS 18. Most importantly, the industry can build a shared understanding to support better decisions, benefiting companies, shareholders and policyholders alike.

Statements of fact and opinions expressed herein are those of the individual authors and
are not necessarily those of the Society of Actuaries or the respective authors’ employers.

Copyright © 2026 by the Society of Actuaries, Chicago, Illinois.