Feedback Statement - IFRS 17
IFRS 17 Insurance Contracts Endorsement Criteria Assessment (ECA) May 2022
Foreword
"The UK Endorsement Board is pleased to present a summary of the feedback received from UK stakeholders on the draft Endorsement Criteria Assessment (ECA) for IFRS 17 Insurance Contracts.
We are grateful for the constructive and insightful views from UK stakeholders at such a critical stage in this endorsement project.
Stakeholder views are summarised in this Feedback Statement and, where appropriate, have been addressed in the final ECA.
We look forward to continuing to engage with UK stakeholders during the implementation and initial application of the Standard.”
Pauline Wallace, Chair, UK Endorsement Board
The UK Endorsement Board (UKEB)
The UKEB is responsible for endorsement and adoption of IFRS for use in the UK and is therefore the UK's National Standard Setter for IFRS. The UKEB also leads the UK's engagement with the IFRS Foundation on the development of new standards, amendments and interpretations.
The purpose of this Feedback Statement
This document presents the views of UK stakeholders received during the UKEB's public consultation on the draft ECA of IFRS 17 Insurance Contracts (IFRS 17) and explains how the UKEB has addressed those views in the final ECA.
Executive summary
| Page | |
|---|---|
| Summary of IFRS 17 objective and principles | 6 – 7 |
| Summary of outreach prior to draft ECA | 8 |
| UKEB public consultation on the draft ECA | 9 |
| Our approach to the assessment | 10 |
| Overall conclusions | 11 – 14 |
Principal objective of IFRS 17
IFRS 17 establishes principles for the recognition, measurement, presentation and disclosure of insurance contracts within the scope of the Standard.
The objective of the Standard, as set out by the IASB, is to ensure that an entity provides relevant information that faithfully represents those insurance contracts.
Such information gives a basis for users of financial statements to assess the effect that insurance contracts have on the entity's financial position, financial performance and cash flows.
Summary of IFRS 17 principles
The key principles of IFRS 17 are that an entity:
- Identifies its insurance contracts within the scope of the Standard (and separates non-insurance components which are accounted for under other relevant IFRS Standards).
- Divides the insurance contracts into groups and measures them at:
- A current estimate of the future cash flows (including adjustments for the timing and risk of those cash flows); and
- An amount representing the unearned profit relating to services still to be provided (the contractual service margin).
- Recognises the profit from a group of insurance contracts over the period the entity provides insurance contract services, and as the entity is released from risk. If a group of contracts is or becomes loss-making, an entity recognises the loss immediately.
- Presents separately insurance revenue, insurance service expenses and insurance finance income or expenses.
- Discloses information that gives a basis for users of financial statements to assess the effects that insurance contracts have on the entity's financial position, financial performance and cash flows.
Summary of outreach prior to draft ECA
Preparers
Preparer webinar
100 registrations / 129 views Joint webinar with IASB
Preparer survey
16 respondents Qualitative and quantitative information gathered
Preparer interviews
23 one to one meetings Follow-up to survey and technical analysis
Investors/other users
Investor webinar
159 registrations / 525 views Joint webinar with IASB, analyst and ratings agency
User survey
21 respondents Survey to gather qualitative responses
User roundtable
11 users participated Joint discussion on key themes identified in User survey
User interviews
14 one to one meetings Structured interviews to gather investor perspectives
Other elements
Economic Report
Data gathering and analysis by external consultants to assess the potential economic impact of IFRS 17 on the UK
Insurance Technical Advisory Group (TAG)
10 TAG meetings Diverse group of insurance specialists providing specialist knowledge and technical advice
Other discussions
Periodic calls with other stakeholders including audit firms, regulators and an industry body (Association of British Insurers)
International liaison
Periodic liaison with the European Financial Reporting Advisory Group (EFRAG) and other National Standard Setters
UKEB public consultation on the draft ECA
The UKEB's public consultation on its draft IFRS 17 ECA took place between 11 November 2021 and 3 February 2022.
All stakeholder comments received by the UKEB were considered in reaching the UKEB's final assessment of the Standard. Stakeholder submissions received were made public* on the UKEB website.
During the consultation period, the UKEB and its Secretariat promoted awareness of its draft IFRS 17 ECA and encouraged stakeholders to respond through News Alerts, speaking engagements, ongoing outreach to UK stakeholders and advertising through the usual channels.
| Stakeholder type | Number of responses |
|---|---|
| Users of accounts (including 3 representative bodies**) | 6 |
| Preparers of accounts (including 2 representative bodies**) | 7 |
| Accounting firms | 6 |
| Professional bodies | 2 |
| Total | 21 |
* Except for those from two respondents who requested that their comments were not shared publicly. ** Representative bodies represent the views of multiple members, often encompassing a variety of stakeholder types.
Our approach to the assessment
Do you have any comments on our approach to the assessment presented in Section 1 of our [Draft] Endorsement Criteria Assessment (ECA)? [Q.1]
| UKEB tentative assessment | Stakeholder views | Header 1 | Header 2 | |----------|----------| | Data 1 | Data 2 |
Disclaimer
This feedback statement has been produced in order to set out how the UKEB has addressed responses received from UK stakeholders to the UKEB's draft Endorsement Criteria Assessment of IFRS 17 Insurance Contracts and should not be relied upon for any other purpose.
The views expressed in this feedback statement are those of the UKEB at the point of publication.
Any sentiment or opinion expressed within this feedback statement will not necessarily bind the conclusions, decisions, endorsement or adoption of any new or amended IFRS by the UKEB.
Contact Us
UK Endorsement Board
1 Victoria Street | London | SW1H 0ET | United Kingdom