Andy is a qualified Chartered Accountant and has worked for Clearwater for eight years. During his time at Clearwater, he has gained a well-rounded view of the industry and needs of Clearwater clients through his positions in service delivery, client services, and product.
Andy’s experience supporting large European insurance clients has given him great insight into the needs of complex international clients, which he puts to use, together with his understanding of Clearwater’s accounting engine.
If, like many Indonesian insurers, you chose to defer adopting PSAK 71 (IFRS 9) until PSAK 74 (IFRS 17) comes into play (1 January 2025), you are likely starting to worry about what these changes mean for your business.
While it might be easier to assume these changes will only impact your current operating model, the truth is that insurers need to start devising an implementation strategy that considers the broader ramifications on their business model, processes, and profitability.
PSAK 71 requires companies to provide more detailed disclosures in line with international standards. Additionally, PSAK 71 introduces a shift in how securities are classified and revamps the approach to impairment. Affected insurers need to be aware of changes, including:
What we learned from the adoption of IFRS 9
Given how similar the adoption of PSAK 71 is to IFRS 9, it is worthwhile for Indonesian insurers to look across the globe to see how the transition has gone for other organizations. In Europe, for example, a Clearwater survey found that data calculations, reporting, and disclosure requirements were the top challenges for groups implementing IFRS 9. Adding to the burden were extra data requirements and tightened reporting timelines.
We saw another area of concern in potential mismatches between IFRS 9 and 17. Having witnessed how this played out for their peers with IFRS 9, Indonesian organizations will have the opportunity to identify and resolve these mismatches in advance of the 2025 deadline.
These challenges can be overcome, but many businesses will need to modernize their finance function to meet the new requirements. It would be prudent for Indonesian businesses to proactively ensure they have the infrastructure to support the upcoming data and disclosure requirements of PSAK 71.
Now is the time to prepare for the 2025 deadline for PSAK 71. Businesses must assess, organize, and strategize to ensure seamless integration of the new standards while maintaining operational goals.
Are you interested in learning more? Clearwater Analytics provides an out-of-the-box solution for IFRS 9 and PSAK 71. Insurers worldwide rely on Clearwater for a centralized data approach and a managed service to seamlessly transition to new accounting standards and guidelines.
Talk to an expert today to learn more about how Clearwater can help your organization successfully transition to PSAK 71.
PSAK 71: Financial Instruments is an updated accounting standard introduced by the Indonesian Financial Accounting Standards Board (DSAK IAI). This new standard provides guidelines on consolidating financial statements, replacing the earlier PSAK 55. One of the primary goals of PSAK 71 is to bring Indonesian accounting practices in line with International Financial Reporting Standards (IFRS).