General Insurance Article - The IASB proposes key IFRS 17 amendments


The International Accounting Standards Board (IASB) met on Wednesday 23 January 2019 and proposed amending key aspects of IFRS 17 Insurance Contracts.

 In late 2018, the International Accounting Standards Board (IASB) agreed to reopen certain aspects of IFRS 17 Insurance Contracts as one of its highest priority activities, following concerns raised by the insurance industry and other key stakeholders. As a result, the IASB agreed to propose a one-year delay to the effective date of IFRS 17 to 1 January 2022.

 At the January 2019 meeting, reflecting insurance industry feedback, the IASB agreed by a significant majority to propose four key IFRS 17 amendments:
 • Change the accounting of proportionate reinsurance held in respect of onerous insurance contracts, to better match and enable a more economic net outcome.
 • Where reinsurance is held to mitigate financial risk in contracts measured using the general measurement model, to remove the accounting mismatch found in the original IFRS 17 standard related to the impact of financial movements over time.
 • Enable deferral of some insurance acquisition cash flows for newly issued contracts, where there are related expected contract renewals.
 • For insurance contracts containing both an insurance and investment component and measured using the general measurement model, recognise both the insurance and investment components in setting the profit recognition patterns to help avoid distortions.

 Kamran Foroughi, Senior Director at Willis Towers Watson, said: “We welcome the IASB’s pragmatism. The reinsurance decisions will help ensure reinsurance remains attractive as a risk mitigation / funding activity and avoid unintended consequences such as raising barriers for new entrants.”

 In papers prepared for the meeting, the IASB indicated that:
 • It plans to issue a limited scope Exposure Draft on proposed IFRS 17 amendments by this summer.
 • It was planning on bringing a number of topics to the February or March meetings, including transition, comparative information, level of aggregation and the scope of IFRS.

 “In supporting these changes, the IASB has tried to avoid an overly prescriptive approach, referring in its proposals to the exercise of judgement and ‘a systematic and rational’ basis,” commented Foroughi. “The Board acknowledged that in making these changes there may be a resulting increase in complexity, albeit outweighed by the benefits arising from reflecting the economic substance. As a result, preparers will need to consider carefully how to interpret the standard. In some cases, this may require significant additional analysis to be performed.

 “It is clear from the latest IASB meeting that insurers should keep going with projects ensuring they are on track for a 2022 implementation, with the direction from the IASB becoming much clearer and only a small number of topics outstanding. Although these proposed changes largely stem from industry feedback, the effort required to understand and assess their impact should not be underestimated.”
  

Back to Index


Similar News to this Story

Parents suffer at work for caring for sick children
New research from MetLife UK shows parents are paying the price for taking time off work to look after sick or injured children in the shape of extra
Whats your holiday nightmare event
Some people travel to soak up the culture, sample the food and bond with the locals, but the UK’s travellers responding to a new survey from global tr
Non life insurers holding more non traditional investments
New research from insurance and investment advisory firm LCP shows significant and growing appetite from non-life insurers for non-traditional investm

Site Search

Exact   Any  

Latest Actuarial Jobs

Actuarial Login

Email
Password
 Jobseeker    Client
Reminder Logon

APA Sponsors

Actuarial Jobs & News Feeds

Jobs RSS News RSS

WikiActuary

Be the first to contribute to our definitive actuarial reference forum. Built by actuaries for actuaries.