4. IFRS 17 Insurance Contracts Effects Analysis Flashcards Preview

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Flashcards in 4. IFRS 17 Insurance Contracts Effects Analysis Deck (7):
1

Benefits of IFRS 17

- Better reflect economic reality
- Reduced use of non-GAAP financial measures
- Improved comparability and transparency (Between companies, similar contracts and industries)
- Capital available to insurers will increase

2

Implementation costs of IFRS 17

- Project design and implementation
- Process changes
- Systems set up
- Education and communication

3

Ongoing costs of IFRS 17

- Updating assumptions
- Adjusting CSM
- Providing disclosures

4

Cost mitigation of IFRS 17

- One framework
- Liability adequacy test not required
- Scope exclusions
- Contract grouping
- Optional simplified approach
- Options for changing discount rates
- Transition relief
- Enhanced integration between risk management and financial reporting
- Reduced need to produce non-GAAP information

5

Why IFRS 17 was developed

IFRS 4 does not address how to measure insurance contracts. There are currently a wide range of insurance accounting practices

6

Key Improvements IFRS 17

Current value of financial options and guarantees
Comparable revenue
Consistent recognition of profit for insurance services, treatment of acquisitions costs, accounting for policies and non-insurance components
Appropriate discount rates
Single approach for all insurance components
Explicit risk adjustment

of

Grouping contracts at initial recognition in a way that reflects profitability
Use of current estimates
More useful info
Making onerous contracts visible in a timely way

7

IFRS and ALM

1. reduction in accounting mismatches
2. company assets strategies will likely shift
3. elimination of stop-gap "overlay approach"