IFRS 17
Background
IFRS 17 Insurance Contracts is a major new accounting standard for insurance contracts. IFRS 17 is effective for annual reporting periods beginning on or after 1 January 2023, with early application permitted. It replaces IFRS 4 Insurance Contracts, an interim standard, which permitted insurers largely to continue to apply their existing (local) accounting practices. This means that insurers may apply different accounting policies to measure similar insurance contracts they write in different countries. IFRS 17 introduces consistent principles, improving international comparability. It will remove some significant current inconsistencies and enable investors, analysts and other users to perform more meaningful comparisons between insurance companies.
The objective of IFRS 17 is to provide more transparent and useful information about insurance contracts. Insurers must use updated estimates and assumptions that reflect the timing of cash flows and any uncertainty relating to insurance contracts. Profits are only recognised as the company delivers services and companies must provide information about insurance contract profits they expect to recognise in the future.
Contact
Contact us at ifrs17@endorsement-board.uk
What are the timelines for UK adoption of IFRS 17
The timing of a final UK adoption decision depends on several factors which are uncertain, including the timing of the delegation of powers to the UK Endorsement Board, which depends on legislation to be made by Government.
In light of the significant amount of work required before the standard can be considered for adoption, the UKEB secretariat has commenced some of the foundation work that will be needed to inform the adoption decision. The work required to assess IFRS 17 against the adoption criteria will include outreach with representatives from stakeholder groups across the UK’s insurance sector, including preparers and users of financial statements. It will also encompass an assessment of the impact of the standard, including the costs and benefits likely to result from its use.
The results of the assessment of IFRS 17 against the adoption criteria will be published for public consultation ahead of any adoption of the standard.
UKEB presentations / webinars:
Slides: Darrel Scott
Slides: Peter Drummond
UKEB webinar with the IASB
On 30 March 2021 the UK Endorsement Board secretariat held a webinar on the UK endorsement of IFRS 17.
Aimed primarily at users of accounts, the webinar featured a presentation by IASB Board member Nick Anderson on how IFRS 17 works and some key improvements it introduces. It also included initial views from equity analyst and ratings agency perspectives on how the standard could impact their analysis of insurance business.
A recording of the webinar is available here.
Technical Advisory Group
Click to access more information about the Technical Advisory Group
IFRS 17 User Survey
The UK Endorsement Board secretariat has launched an IFRS 17 Insurance Contracts survey specifically for users. This is an opportunity for users with an interest in the financial reporting of UK insurers to engage in the assessment of this major standard.
The survey is mainly multiple choice and should take around 20 minutes to complete. Your responses will be aggregated to identify key themes and no information gathered as a result of this survey will be made publicly available other than on an anonymised basis. The deadline for completion of the survey is Wednesday 12 May 2021.
To launch the survey please click on this link.