4. IFRS 17 Insurance Contracts Effects Analysis Flashcards Preview

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

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


Implementation costs of IFRS 17

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


Ongoing costs of IFRS 17

- Updating assumptions
- Adjusting CSM
- Providing disclosures


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


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


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


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



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