IASB publishes proposed amendments to IFRS 17

The International Accounting Standards Board (IASB) has published an exposure draft 'Amendments to IFRS 17' to address concerns and implementation challenges that were identified after IFRS 17 'Insurance Contracts' was published in 2017. The aim of the amendments is to continue supporting implementation by reducing the costs of implementing the Standard and making it easier for companies to explain their results when they apply the Standard.

Comments are requested by 25 September 2019.

In the light of the proposed amendments, the Board has also proposed to defer the effective date of the Standard by one year to 2022.

Suggested changes

The main changes proposed in ED/2019/4 Amendments to IFRS 17 are:
  • Deferral of the date of initial application of IFRS 17 by one year to annual periods beginning on or after 1 January 2022 and change the fixed expiry date for the temporary exemption in IFRS 4 Insurance Contracts from applying IFRS 9 Financial Instruments, so that entities would be required to apply IFRS 9 for annual periods beginning on or after 1 January 2022.

  • Additional optional scope exclusion for loan contracts that transfer significant insurance risk and related transition requirements to enable entities issuing such contracts to account for those contracts applying either IFRS 17 or IFRS 9.

  • Additional scope exclusion for credit card contracts that provide insurance coverage.

  • Amendments regarding allocation, recognition, assessment of the recoverability, and disclosure regarding insurance acquisition cash flows relating to expected contract renewals.

  • Amendments regarding the contractual service margin (CSM) allocation relating to investment components and related disclosure requirements so that in the general model the CSM is allocated on the basis of coverage units that are determined by considering both insurance coverage and any investment return service.

  • Extension of the risk mitigation option to include reinsurance contracts held.

  • Amendments to require an entity that at initial recognition recognises losses on onerous insurance contracts issued to also recognise a gain on reinsurance contracts held.

  • Simplified presentation of insurance contracts in the statement of financial position so that entities would present insurance contract assets and liabilities in the statement of financial position determined using portfolios of insurance contracts rather than groups of insurance contracts.

  • Additional transition relief for business combinations.

  • Additional transition relief for the date of application of the risk mitigation option and the use of the fair value transition approach.
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