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Get ready for IFRS 17

After twenty years of development the IASB has published IFRS 17 ‘Insurance Contracts’ (the Standard).

The Standard introduces insurance contract measurement principles requiring:

• current, explicit and unbiased estimates of future cash flows

• discount rates that reflect the characteristics of the contracts’ cash flows

• explicit adjustment for non-financial risk.

Day one profits should be deferred as a contractual service margin and allocated systematically to profit or loss as entities provide coverage and are released from risk. Revenue is no longer equal to written premiums but to the change in the contract liability covered by consideration.

A separate measurement model applies to reinsurance contracts held. Modifications are allowed for qualifying short-term contracts and participating contracts. Increased disclosure requirements apply.

This publication is designed to get  you ready for the Standard. It explains the key features of the Standard and provides insights into their application and impact.