Whilst the FRC was pleased with the overall level of disclosures provided in the interim reports sampled, it does identify a number of areas for improvement including transition disclosures, specificity and clarity of accounting policies, judgements and estimates and disclosures of choices made in areas where the standard is not prescriptive (such as the choice of transition method, the determination of risk adjustment and discount rates). 

The FRC expects in-scope companies to consider the findings and better practice examples in the thematic review when preparing their forthcoming year-end disclosures. 

Specifically it expects companies to:

• Provide quantitative and qualitative disclosures, which are both decision-useful and company-specific, which meet the disclosure objective of IFRS 17 and enable users to understand how insurance contracts are measured and presented in the financial statements.
• Ensure that accounting policies are sufficiently granular and provide clear, consistent explanations of accounting policy choices, key judgements and methodologies, particularly where IFRS 17 is not prescriptive.
• Where sources of estimation uncertainty exist, provide information about the underlying methodology and assumptions made to determine the specific amount at risk of material adjustment and provide meaningful sensitivities and/or ranges of reasonably possible outcomes.
• Provide sufficiently disaggregated qualitative and quantitative information to allow users to understand the financial effects of material portfolios of insurance (and reinsurance) contracts.
• Clearly explain the impact of transition to IFRS 17, including details of underlying methodology to measure insurance contracts at the measurement date and disclosure of reconciliations of the contractual service margin (CSM) and revenue by transition method.
• Ensure alternative performance measures, and any changes to such measures, are adequately explained, not given undue prominence and reconciled to the most directly reconcilable line item in the financial statements

Whilst the thematic review is predominantly focused on preparers and auditors of insurance companies, the messages will also be relevant for those non-insurers who may also have insurance contracts within the scope of IFRS 17.  Deloitte's A Closer Look publication additionally provides guidance on aspects of IFRS 17 that such entities should consider when they assess whether contracts they issue are within the scope of IFRS 17.

The FRC intends to follow up this thematic review with a similar review of the first set of annual financial statements under IFRS 17 next year.

The press release and the full publication are available on the FRC website.