At its meeting on May 20, 2020, the IASB discussed the sweep issues identified during the balloting process of the amendments to IFRS 17. The Board tentatively decided to:

1. require an entity to include in the initial measurement of the contractual service margin of a group of insurance contracts the effect of the derecognition of any asset or liability for cash flows related to that group that was recognized before the group is recognized;
2. require an entity, when another IFRS Standard requires it to recognize a liability for future insurance acquisition cash flows before it recognizes the related group of insurance contracts, to also recognize an asset for those cash flows;
3. require an entity to use a systematic and rational method of allocation to apply the requirements in IFRS 17 relating to the recovery of losses from reinsurance contracts held when the entity groups together underlying onerous insurance contracts that are covered by a reinsurance contract held and other onerous insurance contracts the entity issues;
4. require an entity to recognize insurance revenue when the entity recognizes in profit or loss amounts related to income tax that are specifically chargeable to the policyholder under the terms of an insurance contract;
5. include in the definitions of the liability for remaining coverage and the liability for incurred claims all obligations arising from insurance contracts issued by an entity; and
6. amend paragraph B96(c) of IFRS 17 to clarify the treatment of insurance finance income or expenses relating to investment components that are paid in a period when they were not expected to be paid, or not paid in a period when they were expected to be paid.

The Board also tentatively decided to amend the other comprehensive income option and the risk mitigation option in IFRS 17 to:

1. specify that paragraphs 88 and 89 of IFRS 17 do not apply to the insurance finance income or expenses that arise from the application of the risk mitigation option; and
2. add new requirements to the risk mitigation option that specify how to present insurance finance income or expenses that arise from the application of the risk mitigation option.

The Board expects to issue Amendments to IFRS 17 around the end of June 2020.

Review the IASB Update and podcast on the Board's Web site.