The International Accounting Standards (IASB) board has proposed amendments to the insurance contracts Standard, IFRS 17, for public consultation.
The body said 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.
IFRS 17 was issued in May 2017 and was the first truly international accounting standard for insurance contracts and was designed to address the “many inadequacies” in accounting for such contracts.
Following discussions with those affected by the standard after it was issued, the board said it decided to propose amendments to IFRS 17 to “alleviate concerns and challenges” raised about implementing the standard.
This Exposure Draft proposes targeted amendments to IFRS 17 relating to the following topics:
- Scope exclusions—credit card contracts and loan contracts that meet the definition of an insurance contract (paragraphs 7(h), 8A, Appendix D and BC9–BC30);
- Expected recovery of insurance acquisition cash flows (paragraphs 28A‒28D, 105A —105C, B35A−B35C and BC31–BC49)
- Contractual service margin attributable to investment-return service and investment-related service (paragraphs 44-45, 109 and 117) Appendix A, paragraphs B119−B119B and BC50–BC66);
- Reinsurance contracts held—recovery of losses on underlying insurance contracts (paragraphs 62, 66A‒66B, B119C−B119F and BC67–BC90);
- Presentation in the statement of financial position (paragraphs 78−79, 99, 132 and BC91–BC100);
- Applicability of the risk mitigation option (paragraphs B116 and BC101−BC109);
- Effective date of IFRS 17 and the IFRS 9 Financial Instruments temporary exemption in IFRS 4 (paragraph C1, [draft] Amendments to IFRS 4 and paragraphs BC110–BC118)
IASB said the proposed amendments are designed to minimise the risk of disruption to implementation already underway and do not change the “fundamental principles” of the standard or “reduce the usefulness of information for investors”.
The board has also proposed to defer the effective date of the standard by one year to 2022.
Hans Hoogervorst, chair of the IASB said: “Moving to IFRS 17 is a big task and this proposed package of targeted amendments will help insurers in their ongoing implementation of the new Standard.”
The comment deadline for the consultation is 25 September 2019.