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IASB decides on further potential amendments to IFRS 17

  • IFRS - IASB Image

Feb 07, 2019

At its meeting on February 7, 2019, the International Accounting Standards Board (the Board) discussed IFRS 17, "Insurance Contracts" and 4 of the 25 concerns regarding the standard that were identified in October 2018 as candidates for potential amendments.

Applying the criteria for evaluating proposed amendments agreed on in October 2018, the Board came to the following conclusions:

Issue identified at the October IASB meeting

Agenda paper with detailed description (link to IASB website)

Staff recommendation

Board decision

1 — Loans that transfer significant insurance risk

Agenda paper 2A

  1. To amend the scope of IFRS 17 and IFRS 9 for insurance contracts for which the only insurance in the contract is for the settlement of some or all of the obligation created by the contract to enable an entity to apply either IFRS 17 or IFRS 9 to such contracts

13/14 support staff recommendation (on portfolio basis)

23 — Transition: Optionality and comparative information

Agenda paper 2B

  1. To retain the IFRS 17 transition requirements without amendment that would reduce the optionality
  2. To retain the IFRS 17 requirement to present restated comparative information

14/14 support both staff recommendations

25 (and some aspects of 8) — Transition: Risk mitigation option and amounts accumulated in other comprehensive income on transition

Agenda paper 2C

  1. To retain the requirements in IFRS 17 relating to the prohibition of retrospective application of the risk mitigation option
  2. To retain the requirements in IFRS 17 with respect to the cumulative amounts included in other comprehensive income

13/14 support staff recommendation 1 (the staff will do further research and bring back the issue at a future meeting); 14/14 support staff recommendation 2

24 — Transition: Modified retrospective approach

Agenda paper 2D

  1. To retain the requirements in IFRS 17 that an entity:
    • (a) cannot use a specified modification in the modified retrospective approach to the extent that the entity has reasonable and supportable information to apply the related IFRS 17 requirement retrospectively
    • (b) can only use a specified modification in the modified retrospective approach when the entity has reasonable and supportable information to apply that modification
  2. To
    • (a) not amend IFRS 17 to permit an entity to develop its own modifications
    • (b) amend the transition requirements in IFRS 17 for a liability that relates to the settlement of claims incurred before an insurance contract was acquired as follows:
      • (i) to add a specified modification to the modified retrospective approach to require an entity to classify such liabilities as a liability for incurred claims
      • (ii) to permit an entity applying the fair value approach to choose to classify such liabilities as a liability for incurred claims
    • (c) not amend the specified modification in the modified retrospective approach related to the use of cash flows that are known to have occurred
    • (d) not amend IFRS 17 to permit an entity to apply the specified modifications related to groups of insurance contracts without direct participation features to determine the contractual service margin for groups of contracts with direct participating features

14/14 support both staff recommendations (additional guidance to be included)

The staff notes that the only outstanding topics are now the level of aggregation of insurance contracts and a question about a risk mitigation option for general model contracts related to the December 2018 Board discussion on risk mitigation. The staff intend to present papers on the remaining topics and on possible sweep issues at the March 2019 Board meeting.

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