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 current inconsistencies and enable investors, analysts and other users to perform 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.
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The timing of a final UK endorsement 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, and whether it is necessary to facilitate application of IFRS 17 for 2022 – i.e. early adoption. The views gathered as part of outreach work will be important and could have an impact on the overall decision timetable.
Slides: Darrel Scott
Slides: Peter Drummond
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