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Insurance contracts

Date recorded:

The purpose of this session was to brief the Board on the strategy for supporting the implementation of the forthcoming IFRS 17 Insurance Contracts.

The IASB will use its website as a hub for publicly available material. The IASB is considering developing webcasts, case studies and examples and articles. It also expects to interact with those needing to become familiar with IFRS 17 through meetings with those implementing the new Standard, and groups such as National Standard-setters.

Transition Resource Group (TRG)

The IASB is establishing a TRG to analyse and discuss IFRS 17 accounting implementation-related questions. The process will:

  1. provide a public forum for stakeholders to learn about the new requirements from others involved with implementation; and
  2. inform the IASB and help the IASB determine whether it needs to provide additional supporting materials such as webinars or case studies, whether a matter should be referred to the Interpretation Committee or whether the IASB should consider the issue itself.

The TRG is not empowered to issue any authoritative guidance.

A public call for members will be issued at around the time of IFRS 17 is issued, which is expected to be in the second half of May. TRG members are expected to be capable of making a positive contribution in discussing implementation questions. The IASB expects to attract applicants from audit firms and preparers and will seek a balance between different IFRS jurisdictions and expertise across insurance product types. In addition, prudential and securities regulators will be given observer status.

Discussion

The IASB Staff provided the IASB with an update on the Insurance Contracts project. The Staff highlighted the major points on the agenda paper, notably summarising the support that the IASB will offer to preparers and users during the period of the IFRS 17 implementation, including guidance on the application of its principles.

The IASB will issue at the same time as IFRS 17 the supporting:

  • Effects analysis
  • Feedback statement
  • Project summary

In addition the Staff announced that they will open a new IFRS 17 website which will include all of the publicly available information the IASB has produced on the subject, including webcasts, case studies, articles and examples. The IASB intends to work with those involved with implementing IFRS 17 so that it can understand the issues that arise, and IASB Staff will bring issues to the Interpretations Committee where necessary. The Staff and IASB members will also present at conferences and hold public meetings of the IFRS 17 Transition Resource Group (TRG). The Staff noted that some insurers had been closely following the development of IFRS 17, and had started IFRS 17 projects, whereas others will not start considering how to meet the requirements of the new Standard until after it has been published.

The Staff expect that there will be general questions that are raised in the six months following the publication of IFRS 17, but as time progresses more specific questions (for example on the accounting for different products in different jurisdictions) will be raised. They expect such issues to be largely resolved by the end of 2018, by which time all preparers must be concentrating on putting systems and processes in place.

There was some discussion by the IASB about the composition of the membership of the TRG. One IASB member stated that the membership must meet the needs and demands of the different jurisdictions and the selection criteria should take into account that certain jurisdictions would need more help than others hence the TRG representation should favour them over those where IFRS 17 would be adopted with less difficulty. Darrel Scott, on invitation from the Chair, commented that it was important to have members of the TRG who recognise and understand the issues as early as possible and have the resources to address these. He further commented that the members should be those who could provide the most help to preparers and users rather than those that needed the most help. However, he also agreed that diversity of membership is important.

Another IASB member stated that, based on her experience from the IFRS 15 TRG work, it is important to encourage discussion on the basic common understanding at an early stage of the TRG work to help ensure that everyone starts in the same way. The Staff responded by stating that discussions can start before the TRG commences its work. One final IASB member suggested that the criterion to balance the TRG appointment of preparers between different IFRS jurisdictions should also apply to audit firms and regulators. The Chairman responded to this comment and concluded the discussions by stating that it would be challenging to balance the geographical representation on the TRG given IFRS is adopted in so many different countries. He assured the IASB that judgment will be applied in that regard with the only constraint of ensuring the TRG comprised a reasonable number of members so that it can operate effectively during its short mandate.

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