Amendments to IFRS 17 Insurance Contracts

Date recorded:

Cover note (Agenda Paper 2)

In June 2019 the Board issued ED/2019/4 Amendments to IFRS 17.  The ED was open for comments until September 2019. During the 90-day comment period, Board members and staff conducted outreach across various jurisdictions.

The purpose of this session was to provide a summary of feedback on the ED gathered during the outreach. The staff plan to provide a summary of feedback from comment letters on the ED at the November 2019 Board meeting.

No technical decisions were requested from the Board at this meeting.

Outreach summary (Agenda Paper 2A)

The agenda paper for this topic was in the form of a slide presentation.

During the comment period, representatives of the Board met with stakeholders from 14 jurisdictions. The Board met mainly with representatives of entities that issue insurance contracts, however, feedback was also sought from auditors, regulators, standard-setters and users of financial statements.

Overall, stakeholders expressed support for the Board considering concerns and implementation challenges raised since IFRS 17 was issued and proposing targeted amendments to IFRS 17. However, some stakeholders think the Board should extend the scope of some of the proposed amendments.

In addition, some European stakeholders commented on:

  • the areas the Board considered and for which amendments to IFRS 17 were not proposed in the Exposure Draft
  • new implementation challenges those stakeholders had recently identified

Detailed stakeholder feedback on the questions asked in the ED and the comments raised by European stakeholders were included in the slide deck.

Board discussion

The staff presented the feedback on the individual amendments proposed in the ED:

Scope exclusions—credit card contracts and loan contracts that meet the definition of an insurance contract

Stakeholders were concerned that some credit card contracts might have to be classified as FVTPL applying IFRS 9. The Vice-Chair asked whether the concern only pertained to credit cards where the insurance product was part of the contractual terms instead of it being a legal requirement. The staff confirmed that.

Expected recovery of insurance acquisition cash flows

Stakeholders were concerned that the proposed requirement to assess the recoverability of the asset would increase the ongoing costs of applying IFRS 17. The Chairman said he understood those frustrations and that this requirement should not have been proposed by the Board.

Contractual service margin attributable to investment-return service and investment-related service

Stakeholders were concerned about the complexity of identifying coverage units for contracts with multiple services. The Vice-Chair noted that the comment letters show that the issue often also relates to existing requirements in IFRS 17 that are not part of the proposed amendments.

Reinsurance contracts held—recovery of losses on underlying insurance contracts

Stakeholders raised concerns that insurance companies might only enter into reinsurance contracts to be able to recognise income when they recognise a loss on initial recognition of an onerous group of contracts. One Board member asked if they offered suggestions on how to eliminate that problem. The staff replied that they only expressed the concern. The Vice-Chair added that regulators saw a risk of matching insurance contracts with reinsurance contracts although there was no true economic relief.

Effective date of IFRS 17 and the IFRS 9 temporary exemption in IFRS 4

One Board member said that one member of the IASB’s Capital Markets Advisory Council (CMAC) noted the importance of a timely implementation of IFRS 17. This would enable investment into the sector and any delay would hold back investments. The Board member said that the Board should not focus only on feedback from preparers.


One Board member said that CMAC noted that the Board should consider two types of cost: the cost of implementation of IFRS 17 to preparers, and the cost of the investor community of not being able to invest in the sector. The Chairman highlighted that the benefit for the insurance companies will only come in a few years when they have better access to capital.

One Board member asked whether user comments would be presented separately to the Board. The staff said they had planned to include those comments in the general feedback, but would point them out when they were particularly pertinent. The Board member said that the Board should consider experience from the IFRS 15 project and the narrow-scope amendments that followed, especially with regard to understanding that not every implementation question can be resolved by the Board.

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.