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requirements of IFRS 17, Insurance Contracts (IFRS 17), as issued by the International Accounting Standards Board (IASB) in May 2017, as well as the new disclosures introduced or modified by IFRS 9, Financial Instruments (IFRS 9), through
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IFRS 17 Insurance Contracts introduces fundamental changes to insurance accounting for some insurers. When IFRS 17 is applied in 2021, it will provide investors with consistent information for all insurance contracts as well as new metrics for evaluating the performance of insurers.
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- Objective
- Scope
- Key DeFINITions
- SepARatIng ComPoNents from An Insurance Contract
- Level of AgGreGaTion
- Recognition
- MeaSureMent
- Discount Rates
- Risk AdJustMent For Non-FiNanCial Risk
- ConTracTual Service Margin
IFRS 17 Insurance Contractsestablishes the principles for the recognition, measurement, presentation and disclosure of Insurance contracts within the scope of the Standard. The objective of IFRS 17 is to ensure that an entity provides relevant information that faithfully represents those contracts. This information gives a bas...
An entity shall apply IFRS 17 Insurance Contractsto: [IFRS 17:3] 1. Insurance contracts, including reinsurance contracts, it issues; 2. Reinsurance contracts it holds; and 3. Investment contracts with discretionary participation features it issues, provided the entity also issues insurance contracts. Some contracts meet the definit...
[IFRS 17: Appendix A] Insurance contract A contract under which one party (the issuer) accepts significant insurance risk from another party (the policyholder) by agreeing to compensate the policyholder if a specified uncertain future event (the insured event) adversely affects the policyholder. Portfolio of insurance contracts Insura...
An insurance contract may contain one or more components that would be within the scope of another standard if they were separate contracts. For example, an insurance contract may include an investment component or a service component (or both). [IFRS 17:10] The standard provides the criteria to determine when a non-insurance component is dis...
IFRS 17 requires entities to identify portfolios of insurance contracts, which comprises contracts that are subject to similar risks and managed together. Contracts within a product line would be expected to have similar risks and hence would be expected to be in the same portfolio if they are managed together. [IFRS 17:14] Each portfolio of insu...
An entity shall recognise a group of insurance contracts it issues from the earliest of the following: [IFRS 17:25] 1. (a) the beginning of the coverage period of the group of contracts; 2. (b) the date when the first payment from a policyholder in the group becomes due; and 3. (c) for a group of onerous contracts, when the group becomes onerous...
On initial recognition, an entity shall measure a group of insurance contracts at the total of: [IFRS 17:32] 1. (a) the fulfilment cash flows (“FCF”), which comprise: 1.1. (i) estimates of future cash flows; 1.2. (ii) an adjustment to reflect the time value of money (“TVM”) and the financial risks associated with the future cash flows; and...
The discount rates applied to the estimate of cash flows shall: [IFRS 17:36] 1. (a) reflect the time value of money (TVM), the characteristics of the cash flows and the liquidity characteristics of the insurance contracts; 2. (b) be consistent with observable current market prices (if any) of those financial instruments whose cash flo...
The estimate of the present value of the future cash flows is adjusted to reflect the compensation that the entity requires for bearing the uncertainty about the amount and timing of future cash flows that arises from non-financial risk. [IFRS 17:37]
The CSM represents the unearned profit of the group of insurance contracts that the entity will recognise as it provides services in the future. This is measured on initial recognition of a group of insurance contracts at an amount that, unless the group of contracts is onerous, results in no income or expenses arising from: [IFRS 17:38] 1. (a)...
FRS 103 consolidates existing financial reporting requirements and guidance for insurance contracts.
wide variety of accounting practices for insurance contracts, reflecting national accounting requirements and variations of those requirements, subject to limited improvements and specified disclosures.
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Explore the updated IFRS 17 guidance and insights provided by EY to help apply the new insurance contracts standard.
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What is impairment of insurance receivables IFRS 17?
Jan 3, 2018 · The fulfilment cash flows are at current value: cash flows, discount rates and risk adjustment are updated at each reporting date. Changes in cash flows and in risk adjustment that relate to coverage to be provided in the future adjust the contractual service margin.
