Insurance Contracts

In March 2004 the International Accounting Standards Board (Board) issued IFRS 4 Insurance Contracts. IFRS 4 was an interim standard which was meant to be in place until the Board completed its project on insurance contracts. IFRS 4 permitted entities to use a wide variety of accounting practices for insurance contracts, reflecting national accounting requirements and variations of those requirements, subject to limited improvements and specified disclosures.

In May 2017, the Board completed its project on insurance contracts with the issuance of IFRS 17 Insurance Contracts. IFRS 17 replaces IFRS 4 and sets out principles for the recognition, measurement, presentation and disclosure of insurance contracts within the scope of IFRS 17.

In June 2020, the Board issued Amendments to IFRS 17. The objective of the amendments is to assist entities implementing the Standard, while not unduly disrupting implementation or diminishing the usefulness of the information provided by applying IFRS 17.

In December 2021, the Board issued Initial Application of IFRS 17 and IFRS 9—Comparative Information (Amendment to IFRS 17). The minor amendment relates to the transition to IFRS 17.

Other Standards have made minor consequential amendments to IFRS 17, including Amendments to References to the Conceptual Framework in IFRS Standards (issued March 2018) and Definition of Material (Amendments to IAS 1 and IAS 8) (issued October 2018).

CONTENTS

from paragraph

IFRS 17 INSURANCE CONTRACTS

OBJECTIVE 1

SCOPE 3

Combination of insurance contracts 9

Separating components from an insurance contract 10

LEVEL OF AGGREGATION OF INSURANCE CONTRACTS 14

RECOGNITION 25

Insurance acquisition cash flows 28A

MEASUREMENT 29

Measurement on initial recognition 32

Subsequent measurement 40

Onerous contracts 47

Premium allocation approach 53

Reinsurance contracts held 60

Investment contracts with discretionary participation features 71

MODIFICATION AND DERECOGNITION 72

Modification of an insurance contract 72

Derecognition 74

PRESENTATION IN THE STATEMENT OF FINANCIAL POSITION 78

RECOGNITION AND PRESENTATION IN THE STATEMENT(S) OF FINANCIAL PERFORMANCE 80

Insurance service result 83

Insurance finance income or expenses 87

DISCLOSURE 93

Explanation of recognised amounts 97

Significant judgements in applying IFRS 17 117

Nature and extent of risks that arise from contracts within the scope of IFRS 17 121

APPENDICES

A Defined terms

B Application guidance

C Effective date and transition

D Amendments to other IFRS Standards

APPROVAL BY THE BOARD OF IFRS 17 INSURANCE CONTRACTS

APPROVAL BY THE BOARD OF AMENDMENTS TO IFRS 17 ISSUED IN JUNE 2020

APPROVAL BY THE BOARD OF INITIAL APPLICATION OF IFRS 17 AND IFRS 9—COMPARATIVE INFORMATION ISSUED IN DECEMBER 2021

FOR THE ACCOMPANYING GUIDANCE LISTED BELOW, SEE PART B OF THIS EDITION

• ILLUSTRATIVE EXAMPLES

FOR THE BASIS FOR CONCLUSIONS, SEE PART C OF THIS EDITION

• BASIS FOR CONCLUSIONS

IFRS 17 Insurance Contracts is set out in paragraphs 1–132 and appendices A–D. All the paragraphs have equal authority. Paragraphs in bold type state the main principles. Terms defined in Appendix A are in italics the first time that they appear in the Standard. Definitions of other terms are given in the Glossary for IFRS Standards. The Standard should be read in the context of its objective and the Basis for Conclusions, the Preface to IFRS Standards and the Conceptual Framework for Financial Reporting. IAS 8 Accounting Policies, Changes in Accounting Estimates and Errors provides a basis for selecting and applying accounting policies in the absence of explicit guidance.