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Amendments to IFRS 17, Insurance Contracts [Completed]

Effective date:

The amendments to IFRS 17 are effective for annual periods beginning on or after January 1, 2023. Earlier application is permitted. They are to be applied retrospectively. The amendments to IFRS 4 defer the requirement to apply IFRS 9 to annual periods beginning on or after January 1, 2023

Last up­dated:

June 2020

Overview

Since IFRS 17 Insurance Contracts was issued in May 2017, the Board has been monitoring the implementation and has learned about concerns and implementation challenges. The Board had previously indicated that it would consider whether additional action is needed to address matters arising during implementation.

At the October 2018 meeting of the Board a list of 25 potential amendments to the standard was identified and the criteria against which any possible amendment would be considered were agreed. An Exposure Draft of proposed amendments was published on June 26, 2019 with comments requested by September 25, 2019.

In the redeliberations re this project on possible amendments to IFRS 17 following the end of the comment period, the IASB refined its proposals and took additional feedback by constituents on board resulting in the final amendments issued on June 25, 2020.

The main changes resulting from Amendments to IFRS 17 and Extension of the Temporary Exemption from Applying IFRS 9 (Amendments to IFRS 4) issued on June 25, 2020 are:

  • Deferral of the date of initial application of IFRS 17 by two years to annual periods beginning on or after January 1, 2023 and change the fixed expiry date for the temporary exemption in IFRS 4 Insurance Contracts from applying IFRS 9 Financial Instruments, so that entities would be required to apply IFRS 9 for annual periods beginning on or after January 1, 2023.
  • Additional scope exclusion for credit card contracts and similar contracts that provide insurance coverage as well as optional scope exclusion for loan contracts that transfer significant insurance risk.
  • Recognition of insurance acquisition cash flows relating to expected contract renewals, including transition provisions and guidance for insurance acquisition cash flows recognized in a business acquired in a business combination.
  • Clarification of the application of IFRS 17 in interim financial statements allowing an accounting policy choice at a reporting entity level.
  • Clarification of the application of contractual service margin (CSM) attributable to investment-return service and investment-related service and changes to the corresponding disclosure requirements.
  • Extension of the risk mitigation option to include reinsurance contracts held and non-financial derivatives.
  • Amendments to require an entity that at initial recognition recognizes losses on onerous insurance contracts issued to also recognize a gain on reinsurance contracts held.
  • Simplified presentation of insurance contracts in the statement of financial position so that entities would present insurance contract assets and liabilities in the statement of financial position determined using portfolios of insurance contracts rather than groups of insurance contracts.
  • Additional transition relief for business combinations and additional transition relief for the date of application of the risk mitigation option and the use of the fair value transition approach.
  • Several small amendments regarding minor application issues.

Although the IASB had in its discussions leading up to the Exposure Draft voted unanimously to leave the annual cohort requirement in IFRS 17 unchanged and did not ask a question on it in the draft, some respondents commented on the IASB’s decision to retain the requirements unchanged. The IASB, therefore, included in its deliberations the question of annual cohorts in February 2020 once more. However, it came to the same conclusion as before and decided to retain, unchanged, the annual cohort requirement in IFRS 17.

The amendments to IFRS 17 are effective for annual periods beginning on or after January 1, 2023. Earlier application is permitted. They are applied retrospectively. Extension of the Temporary Exemption from Applying IFRS 9 (Amendments to IFRS 4) defers the fixed expiry date of the amendment to annual periods beginning on or after January 1, 2023. 

For further details, refer to the IASB’s Project Summary and Feedback Statement.

 

Other de­vel­op­ments

June 2020

On June 25, 2020, the IASB issued the Amend­ments to IFRS 17 and IFRS 4 relating to this project.

April 2020

On April 17, 2020, IASB staff updated the Work Plan to indicate that the Board plans to issue the Amendments to IFRS 17 in June 2020.

March 2020

On March 17, 2020, the IASB held a meeting and discussed and voted on the remaining issues resulting from the feedback received on the exposure draft ED/2019/4 "Amendments to IFRS 17" which were the effective date of IFRS 17 and the expiry date of the IFRS 9 temporary exemption in IFRS 4.

On the effective date, which originally was set at January 1, 2021 and which ED/2019/4 proposed to move to January 1, 2022, the Board now decided to:

  1. defer the effective date of IFRS 17 (incorporating the amendments) to annual reporting periods beginning on or after January 1, 2023; and
  2. extend the fixed expiry date of the temporary exemption from applying IFRS 9 in IFRS 4 to annual reporting periods beginning on or after January 1, 2023.

January 2020

On January 31, 2020, the IASB staff updated the Work Plan to indicate that the IASB plans to issue the Amendments to IFRS 17 in Q2/2020.

December 2019

On December 13, 2019, the IASB staff updated the Work Plan to indicate that the IASB plans to issue the Amendments to IFRS 17 in the first half of 2020. 

November 2019

On November 25, 2019, the IASB staff updated the Work Plan to indicate that the Board plans to issue the Amendments to IFRS 17 in Q2/2020.

October 2019

On October 1, 2019, the IASB® staff updated the work plan to indicate that the Board expects to review the Exposure Draft Feedback in November 2019.

July 2019

On July 17, 2019, the Accounting Standards Board (AcSB) issued its Exposure Draft that corresponds to the IASB’s Exposure Draft on this topic. Comments are requested by September 25, 2019.

June 2019

On June 26, 2019, the IASB issued its Ex­po­sure Draft to amend IFRS 17. Comments are requested by September 25, 2019

April 2019

On April 12, 2019, the IASB® staff updated the work plan to indicate that the Board expects to issue an Exposure Draft in June 2019.

January 2019

On January 25, 2019, the IASB staff updated the work plan to indicate that the Board expects to issue an Exposure Draft in Q2/2019.

December 2018

On December 14, 2018, the IASB staff has added a new project to the work plan in respect of amendments to IFRS 17, in­di­cating that the Board ex­pects to is­sue an Ex­po­sure Draft in the first half of 2019.

 

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