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Insurance contracts: IFRS 9 and IFRS 4 - second session

Date recorded:

Following clarification of the voting rules, the Chairman used his casting vote in favour of the Staff recommendation to adopt the 'deferral approach' as the proposed solution to the decoupling of effective dates between IFRS 9 and the new insurance contracts Standard. The casting vote was exercised when the IASB session on insurance resumed on Wednesday 23 September 2015.

To be noted that agenda paper 14 " Different effective dates of IFRS 9 and the new insurance contracts Standard: A summary of approaches" was available in support of this crucial vote. In this paper the IASB Staff provided a comparative summary of the 'overlay approach' and the 'deferral approach', and was provided in order to facilitate the understanding and discussion of those approaches.

Different effective dates of IFRS 9 and the new insurance contracts Standard: Due process and permission to ballot (Agenda Paper 14E)

The objective of this paper is to consider the effective date and the expiry date of the proposed amendments to IFRS 4 and to ask the IASB for permission to ballot the Exposure Draft (ED) to amend IFRS 4 and about any intentions to dissent.

Due process and permission to ballot

The ED to amend IFRS 4 should state that the effective date of the proposed requirements is for annual periods beginning on or after 1 January 2018, and early adoption is permitted if and only if an entity wishes to adopt IFRS 9 early. The Staff recommended that the ED should not specify the expiry date of the proposed requirements.

Following discussion about the need for an expiry date for the proposed requirements the Staff proposal was changed so as to specify an expiry date of 31 December 2020 that would make IFRS 9 mandatorily effective to all insures on 1 January 2021. The IASB decided that the 'overlay approach' will not have an expiry date. If the new insurance contract Standard is effective, at the latest, on 1 January 2020 the expiry date of the proposed requirements will become redundant and IFRS 9 will be effective for all insures at the same time. If this scenario materialises it will also abolish the 'overlay approach'.

IASB members voted unanimously in favour of the amended Staff recommendation. One IASB member was absent on the day.

One Board member stated that she planned to dissent, and the Chairman suggested that the absent Board member may also dissent. The other IASB members who voted against the deferral indicated that they would not dissent. At least nine votes in favour will be needed to amend IFRS 4.

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