Insurance and IFRS 9

Date recorded:

In September the IASB decided, after the Chairman had exercised a casting vote, to propose a package of temporary measures in relation to the application of the new financial instruments Standard, IFRS 9, before the new insurance contracts Standard comes into effect. At this meeting the IASB discussed how those measures would apply to first-time adopters and set the comment period. 


The package of proposed temporary measures, if confirmed, would amend IFRS 4 to:

  1. permit a reporting entity whose activities are predominantly insurance a temporary exemption from applying IFRS 9 until the earliest of the entity’s adoption of the new insurance contracts Standard or 1 January 2021 (‘the Deferral Approach’); and
  2. to give entities issuing insurance contracts that implement IFRS 9 the option to remove from profit or loss some of the accounting mismatches and temporary volatility that could occur before the new insurance contracts Standard is implemented (‘the Overlay Approach’).

First-time adopters

The staff recommendation was that first-time adopters be prohibited from using either of the approaches in the temporary package.  They argued that it is unlikely to be relevant to first-time adopters and, because they are not already applying IFRS, the arguments about comparability being undermined are not relevant. 

Comment period

The staff recommendation was that the IASB exposes the proposed temporary measures for 60 days, on the grounds that it is urgent and narrow in scope.  If the IASB support the recommendation the staff expect to be able to publish the exposure draft in December 2015 and with the goal of finalising the package in the third quarter of 2016. 


IASB discussion and decisions

Comment period

In considering the comment letter period the Board agree with the Staff recommendation that the matter is both narrow in scope and urgent and agreed to a comment period of 60 days. (The due process requires for the comment letter period to be a minimum of 120 days unless the matter is narrow in scope and urgent, in which case it can be not less than 30 days.) This decision would now need to be approved by Due Process Oversight Committee.

First-time adopters

The IASB agreed with the Staff recommendation to prohibit deferral and overlay approaches to implementation of IFRS 9 for first time adopters (see paper 14B).  This is on the grounds that both the deferral approach and the overlay approach require information resulting from applying IAS 39 in part or in full, which in itself would be a new requirement for first time adopters.  Accordingly, both approaches are considered not to be relevant to first time adopters and prohibiting them is consistent with the principles of IFRS 1 of applying the current versions of IFRSs and enhancing comparability within entity over time.

Next steps and timing

Next stepsExpected timetable
ED is published to amend IFRS 4 December 2015
60 day comment period ends February 2016
Redeliberations on the ED proposals Second Quarter of 2016
Amendments to IFRS 4 issued Third Quarter of 2016


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