This site uses cookies to provide you with a more responsive and personalised service. By using this site you agree to our use of cookies. Please read our cookie notice for more information on the cookies we use and how to delete or block them.
The full functionality of our site is not supported on your browser version, or you may have 'compatibility mode' selected. Please turn off compatibility mode, upgrade your browser to at least Internet Explorer 9, or try using another browser such as Google Chrome or Mozilla Firefox.

AOSSG has doubts the 'overlay approach' is the best way to address the different effective dates of IFRS 9 and the new insurance standard

  • AOSSG (Asian-Oceanian Standard-Setters Group) (dk green) Image

17 Sep 2015

The Asian-Oceanian Standard-Setters Group (AOSSG) has commented on the IASB's recent discussion in addressing the consequences arising from different effective dates of IFRS 9 'Financial Instruments' and the upcoming insurance standard.

In July 2015, the IASB tentatively decided to amend IFRS 4 Insurance Contracts to address the consequences of different effective dates of IFRS 9 and the new insurance contracts standard. The approach developed has become known as the "overlay approach" and involves excluding from profit or loss and recognising in other comprehensive income the difference between the amounts that would be recognised in profit or loss in accordance with IFRS 9 Financial Instruments and the amounts recognised in profit or loss in accordance with IAS 39 Financial Instruments: Recognition and Measurement.

AOSSG members are not fully convinced that this approach is the best to take. They believe this solution would not cater well for insurers that are a part of a larger finance entity, and would not cater for insurance activities that are a part of a group that has already applied IFRS 9. They also fear that it could complicate the insurers’ presentation of performance reporting and may escalate the view that the amounts flowing through OCI would not be a source of useful information.

In its letter, the AOSSG therefore suggests that aligning the effective date of IFRS 9 and the forthcoming standards on insurance contracts might be a better solution. Views on how this might best be implemented differ between AOSSG members. Some suggest an option for insurers to continue to apply IAS 39, some believe local regulators should determine the scope of such an option, some believe the option to apply IFRS 9 twice would be the best way forward.

The AOSSG letter is well timed. At its upcoming meeting next week, the IASB will discuss a "deferral approach" in addition to the "overlay approach" that could lead to a potential IFRS 9 deferral.

Please click to access the full letter on the AOSSG website.

Correction list for hyphenation

These words serve as exceptions. Once entered, they are only hyphenated at the specified hyphenation points. Each word should be on a separate line.