IFRS 17 Update
Recently Published Amendments
International Financial Reporting Standard (IFRS) 17, issued by the International Accounting Standards Board (IASB) in May 2017, introduced for the first time a single insurance accounting model for all types of insurance contracts under IFRS. The key objective is to make insurance accounting transparent and consistent across the globe, and align insurance accounting with IFRS accounting of other industries to improve comparability.
On 25 June 2020, the IASB issued Amendments to IFRS 17 Insurance Contracts, which makes targeted amendments to the following aspects of IFRS 17:
- Deferral of the date of initial application of IFRS 17 by two years to annual periods beginning on or after 1 January 2023
- Recognition of insurance acquisition cash flows relating to expected contract renewals, including transition provisions and guidance for insurance acquisition cash flows recognised in a business acquired in a business combination
- Simplified presentation of insurance contracts in the statement of financial position so that entities would present insurance contract assets and liabilities in the statement of financial position determined using portfolios of insurance contracts rather than groups of insurance contracts
- Amendments to require an entity that recognises losses on onerous insurance contracts issued at initial recognition to also recognise a gain on reinsurance contracts held
- Clarification of the application of IFRS 17 in interim financial statements allowing an accounting policy choice at a reporting entity level
- Clarification of the application of contractual service margin (CSM) attributable to investment-return service and investment-related service and changes to the corresponding disclosure requirements
- Extension of the risk mitigation option to include reinsurance contracts held and non-financial derivatives
- Additional transition relief for business combinations and additional transition relief for the date of application of the risk mitigation option and the use of the fair value transition approach
- Additional scope exclusion for credit card contracts and similar contracts that provide insurance coverage as well as optional scope exclusion for loan contracts that transfer significant insurance risk
For assistance with IFRS17 implementation advice, please get in touch with our Actuarial and Insurance team.