EFRAG repeats that the IFRS 9/insurance issue needs to be solved quickly

  • EFRAG (European Financial Reporting Advisory Group) (dk green) Image
  • European Union Image

04 Dec 2015

In September 2015, the European Financial Reporting Advisory Group (EFRAG) finalised the long-awaited endorsement advice on IFRS 9 ‘Financial Instruments’ and recommended endorsement of IFRS 9, but withheld comments on insurance industry.

In its endorsement advice, EFRAG committed to sending an update on the IASB's progress in addressing concerns relevant to the insurance industry. The final letter to the European Commission, which follows a draft letter in November, has now been made available on the EFRAG website.

EFRAG states that stakeholders have reaffirmed that bringing a solution to the insurance issue should not be a cause of delay of endorsement of IFRS 9, that the solution to the insurance issue should ideally be found in amendments to IFRS issued by the IASB, and that all companies in Europe, including those involved in insurance activities, need clarity as a matter of urgency on how and when they have to apply IFRS 9.

EFRAG goes on to analyse the two approaches the IASB intends to propose shortly (the overlay approach and the deferral approach) and - on basis of the limited information available yet - believes that the deferral approach offers more advantages than the overlay approach but that there potential restrictions in its use. EFRAG notes that it would be worth exploring whether different criteria can be identified that would support the application of the deferral approach to as many relevant entities as possible.

Please click to download the full letter from the EFRAG website.

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