The IFRS Interpretations Committee (the Committee) received a request about a group of annuity contracts. The request asked how an entity determines the amount of the contractual service margin to recognise in profit or loss in a period because of the transfer of insurance coverage for survival in that period.
The Committee discussed this topic and tentatively decided not to add a standard-setting project to the IFRS Foundation work plan. In March 2022, the Committee invited comments on their Tentative Agenda Decision. The comment period closed on 23 May 2022.
The UKEB’s response to this Tentative Agenda Decision is available at the foot of this page.
IFRS 17 Insurance Contracts was approved for adoption by all members of the UK Endorsement Board on 16 May 2022.
A link to the Adoption Statement and text of UK-adopted IFRS 17 can be found here.
The effective date of UK-adopted IFRS 17 is 1 January 2023. The UKEB will carry out a review of the impact of the adoption of the standard and a report setting out the conclusions of this review will be published by the UKEB by 1 January 2028.
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IFRS 17 Insurance Contracts is a major 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.
The objective of IFRS 17 is to provide more transparent and useful information about insurance contracts. IFRS 17 introduces consistent principles, improving international comparability. 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.
IFRS 17 was issued by the International Accounting Standards Board (IASB) in May 2017 and amended in June 2020. Subsequently, in December 2021 the IASB published a narrow-scope amendment to IFRS 17’s transition requirements to enable entities to improve the usefulness of the comparative information presented on initial application of IFRS 17 and IFRS 9 Financial Instruments. For more information on the UKEB’s work in relation to the December 2021 amendment, please see here.
On 11 November 2021 the UKEB issued for public consultation its Draft Endorsement Criteria Assessment (ECA): IFRS 17 Insurance Contracts.
The public consultation period closed on 3 February 2022. Thank you to all stakeholders that provided feedback.
All responses received were considered when finalising the ECA. The UKEB Final IFRS 17 ECA was published on 17 May 2022. An accompanying Feedback Statement, describing how feedback received from stakeholders was addressed, was also published on the same date.
The following relevant documents are available at the foot of this page:
In May 2021 the UKEB conducted a User survey to gather users’ views on the implementation of IFRS 17. Participants included analysts, rating agencies and investor associations. Nine analysts also attended the User roundtable to discuss the key themes identified in the User survey.
In September 2020 the UKEB secretariat conducted a survey of insurance companies to gather views on the implementation of IFRS 17. Sixteen insurance companies responded to the Preparer survey, representing approximately 67% of the total gross written premiums of all UK insurance companies using IFRS.
In March 2021 the UK Endorsement Board secretariat held a webinar on the UK endorsement of IFRS 17. The event was aimed primarily at users of accounts and featured a presentation by IASB Board member Nick Anderson on key features of IFRS 17. It also included initial views from equity analyst and rating agency perspectives on how the standard could impact their analysis of insurance businesses.
A recording of the webinar is available here.
In May 2020 the UK Endorsement Board secretariat held a webinar on IFRS 17 for stakeholders which featured a presentation by IASB Board member Darrel Scott.
A recording of the webinar is available here.
An Economic Report on the impact of IFRS 17 was commissioned from Europe Economics and finalised in November 2020. The report is available here.
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IFRS 17-related topics were discussed in the following UKEB meetings here.