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The International Financial Reporting Standard 17 (IFRS 17) marks a significant shift in the insurance industry's financial reporting landscape. With its implementation, insurance companies are not only required to adapt their accounting practices but also need to redefine their Key Performance Indicators to effectively measure and communicate their financial performance.


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Connect to a new world of efficiency by utilizing cleversoft’s business solutions.

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Let's talk how we can help your business.


Connect to a new world of efficiency by utilizing cleversoft’s business solutions.

Get in touch

The International Financial Reporting Standard 17 (IFRS 17) marks a significant shift in the insurance industry’s financial reporting landscape. With its implementation, insurance companies are not only required to adapt their accounting practices but also need to redefine their Key Performance Indicators to effectively measure and communicate their financial performance. In this article, we will explore the new KPIs introduced by IFRS 17, that are crucial for transparent and accurate financial reporting.

IFRS 17 KPI metrices

Contractual Service Margin (CSM) based measures

CSM represents the unearned profit that insurers will recognize over the coverage period of an insurance contract. This metric allows stakeholders to assess the profitability of insurance contracts over time, providing insights into the long-term financial health of an insurer.

Insurers can use the CSM as a key indicator to assess the profitability and sustainability of their insurance portfolios and they can use following metrices based on the CSM value:

Contractual Service Margin (CSM) based measures Formulas

Risk Adjustment (RA) based measures

IFRS 17 requires insurers to include a risk adjustment in their financial statements, reflecting the compensation an insurer requires for bearing the uncertainty related to insurance contracts. The risk adjustment can be used as a KPI to evaluate an insurer’s risk management practices. A higher risk adjustment may indicate a more conservative approach to risk, while a lower adjustment may signal a more aggressive stance. The following metrices can reflect that:

Risk Adjustment (RA) based measures Formulas

Other measures

IFRS17 introduces new concepts like Loss Component and discloses separately experience adjustments. Additionally, there is a clear separation between inward and outward business. Those effects allow insurance companies to identify and measure additional metrices, for instance:

Other measures Formulas

Combined Ratio for non-life insurance

For non-life business the important measure was and remains the Combined Ratio. Under IFRS 17, however, the ratio is driven by other factors due to different basis of calculations (Risk Adjustment replacing the previous prudency margins, discounting effects, potential differences in allocation of maintenance expenses and existence of investment components). With cleversoft’s solution you can analyze the difference between previously reported ratio and IFRS17-based ratio with every calculation you run.

Impacts on combined ratio

IFRS 17 reporting solution

cleversoft’s eFrame tool, a solution for IFRS 17 reporting, ensures the coverage of all relevant KPIs.

The tool allows for tracking the most important metrics, thanks to the dashboards incorporated into the models.

Users have access to different dashboards that can display :

The reports we provide include the majority of calculated variables presented per portfolio. This empowers you to effortlessly  calculate new and unique matrices.

Moreover, our commitment to compliance not only guarantees that our eFrame tool is always up-to-date with the latest changes to the IFRS 17 regulation but also ensures that key performance indicators (KPIs) are accurately tracked and reported. This provides you with the assurance of accuracy, relevance, and a clear view of your portfolio’s performance.

For more information on our offerings contact us.