After twenty years of development the IASB published IFRS 17 ‘Insurance Contracts’. This new Standard replaces IFRS 4 which was published in 2004. IFRS 4 was designed to be an interim Standard and therefore allowed entities issuing insurance contracts to carry on accounting for them using policies that had been developed under their previous local accounting standards. This meant that companies continued to use a multitude of different approaches for accounting for insurance contracts, making it difficult to compare and contrast the financial performance of otherwise similar companies.
IFRS 17 solves the comparison problems created by IFRS 4 by requiring all insurance contracts to be accounted for in a consistent manner, benefiting both investors and insurance companies. Insurance obligations will be accounted for using current values instead of historical cost, ending the practice of using data from when a policy was taken out.
The Standard introduces insurance contract measurement principles requiring:
IFRS 17 rewrites the rulebook for insurance reporting and will transform data, people, technology solutions and investor relations. Over the next three years, we expect the key focus areas for entities to be:
This guide is designed to get you ready for this major new Standard. It explains the Standard’s key features and provides insights into their application and impact.
The Standard has an effective date of 1 January 2021 but may be applied earlier (subject to considerations imposed by local legislation). If you have any further questions please get in contact with the global IFRS team or your local member firm.
