The UKEB highlights the importance of this issue to the insurance industry and indicates that finalising an agenda decision that clarifies the application of IFRS 17 Insurance Contracts would enable insurers and auditors to move towards the initial application of IFRS 17 with greater certainty over this issue and would also remove potential diversity in practice.  In that respect the UKEB encourages the IFRS Interpretations Committee to finalise the decision as soon as possible.

The UKEB acknowledges the concerns expressed by various stakeholders regarding the tentative agenda decision and indicates that they should be considered by the International Accounting Standard Board (IASB) on a holistic basis once experience has been gained of applying the standard in practice.  These areas include:

• Uncertainty over the concept of insurance service and what that might comprise, how its transfer to policyholders might be measured and whether that should necessarily be linked to, or limited by policyholders’ ability to make valid claims in the period.
• Interaction of the CSM with the risk adjustment for non-financial risk.
• Whether the criteria for recognition of an investment-return service operate as intended, and whether further guidance on splitting the CSM between different insurance contract services would be useful.

The UKEB believes that there is a risk of further diversity in practice if these matters are not addressed and that they should be addressed as part of the IFRS 17 post-implementation review

The final comment letter is available on the UKEB website.