IFRS 17 Insurance Contracts

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. More information on the UKEB’s work in relation to the December 2021 amendment.

On 11 November 2021 the UKEB issued for public consultation its Draft Endorsement Assessment Criteria DECA - IFRS 17. The public consultation period closed on 3 February 2022. The comment letters received from stakeholders are also published below and were considered when finalising the Endorsement Assessment Criteria (ECA). Following a public consultation period on the DECA, the UKEB ECA - IFRS 17 was published on 17 May 2022. An accompanying Feedback Statement, describing how feedback received from stakeholders was addressed, was published on 17 May 2022.

The following relevant documents are:

• DECA - IFRS 17 and Invitation to Comment - IFRS 17
• Responses from stakeholders
• ECA - IFRS 17
• Feedback Statement - IFRS 17

User Survey and Roundtable

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.

• UKEB IFRS 17 User Survey – Summary of Findings
• UKEB IFRS 17 User Roundtable – Summary of Discussion

Preparer 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.

• UKEB IFRS 17 Preparer Survey – Summary of Findings

Webinars

In March 2021 the UKEB 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. View the recording of the webinar.

In May 2020 the UKEB secretariat held a webinar on IFRS 17 for stakeholders which featured a presentation by IASB Board member Darrel Scott. View the recording of the webinar.

Access more information about the IFRS 17 Technical Advisory Group.

An Economic Report on the impact of IFRS 17 was commissioned from Europe Economics and finalised in November 2020. View the report.