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Amendments to IFRS 17, Insurance Contracts [ED]

Comments are requested by September 25, 2019

Next steps:

The IASB plans to issue the Amendments to IFRS 17 in Q2/2020

Last up­dated:

November 2019


IFRS 17, Insurance Contracts was issued by the IASB on May 18, 2017.  Implementing IFRS 17 represents fundamental changes for some insurers for the following reasons: (i) many concepts in IFRS 17 are new; (ii) it is the first time an IFRS Standard has prescribed the measurement of insurance contracts; and (iii) because insurers currently use local requirements to account for their insurance contracts, they are approaching the transition to the new accounting requirements from many different perspectives. Also, applying the requirements in IFRS 17 will prompt changes in insurers’ operations; for example, many insurers may have to upgrade their data, systems and processes.

Since IFRS 17 was issued, the Board has proactively been working to support insurers and others with the transition to the new Standard, including through establishing a Transition Resource Group and providing education materials. As part of that process, it has sought to understand any concerns and implementation challenges that insurers have identified while implementing the Standard. 

In De­cem­ber 2018, the IASB de­cided to for­mally set up a pro­ject to amend IFRS 17. The Board dis­cussed stake­holder con­cerns and im­ple­men­ta­tion chal­lenges raised since the Stan­dard was is­sued and con­sid­ered whether there is a need to amend the Stan­dard. The cri­te­ria against which any pos­si­ble amend­ment would be con­sid­ered were agreed at the Board’s Oc­to­ber 2018 meet­ing and at that time a list of 25 potential amendments to the standard was identified; subsequent discussions have led to the proposed amendments that are included in the June 2019 Exposure Draft.

The main changes proposed in ED/2019/4, Amendments to IFRS 17, are:

  • Deferral of the date of initial application of IFRS 17 by one year to annual periods beginning on or after January 1, 2022 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, 2022. 
  • Additional optional scope exclusion for loan contracts that transfer significant insurance risk and related transition requirements to enable entities issuing such contracts to account for those contracts applying either IFRS 17 or IFRS 9. 
  • Additional scope exclusion for credit card contracts that provide insurance coverage. 
  • Amendments regarding allocation, recognition, assessment of the recoverability, and disclosure regarding insurance acquisition cash flows relating to expected contract renewals. 
  • Amendments regarding the contractual service margin (CSM) allocation relating to investment components and related disclosure requirements so that in the general model the CSM is allocated on the basis of coverage units that are determined by considering both insurance coverage and any investment return service. 
  • Extension of the risk mitigation option to include reinsurance contracts held. 
  • 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. 
  • Additional transition relief for the date of application of the risk mitigation option and the use of the fair value transition approach.

The exposure draft also contains several smaller proposed amendments.

The proposed effective date for the amendments would be the same as the proposed new effective date for IFRS 17 (i.e. January 1, 2022) with early application permitted. The amendments would be applied retrospectively.


Other de­vel­op­ments

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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