EFRAG Endorsement Advice on Applying IFRS 9 Financial Instruments with IFRS 4 Insurance Contracts (Amendments to IFRS 4)

The European Financial Reporting Advisory Group (EFRAG) has completed its due process on the IFRS amendment Applying IFRS 9 Financial Instruments with IFRS 4 Insurance Contracts (Amendments to IFRS 4).

Following the publication by the International Accounting Standards Board (IASB) in September 2016  of IFRS 9 Financial Instruments with IFRS 4 Insurance Contracts (Amendments to IFRS 4), which aimed to address the concerns related to the misalignment of the effective dates of IFRS 9 and the future insurance contracts Standard, EFRAG has issued its endorsement advice to the .European Commission.

The advice states that in the specific circumstances arising from the misalignment of effective dates referred to above, the amendments to IFRS 4 meets all technical endorsement criteria of the IAS Regulation. EFRAG further assesses that the amendments address the main concerns of entities whose activities are predominantly related to insurance, who are the most significantly affected by the issues arising from the misalignment of the effective dates of IFRS 9 and the forthcoming insurance contracts Standard. On that basis, EFRAG assesses that adopting the Amendments would be conducive to the European public good.

The advice further states that the Amendments address many of the concerns raised in its endorsement advice on IFRS 9, but do not address the cost concerns of many entities undertaking insurance activities that are not predominant insurers. EFRAG could not exclude that the Amendments could create a competition issue. However, EFRAG is not in a position to conclude on whether this is material from an economic perspective.

The Endorsement Advice Letter is available from the EFRAG website here.

EFRAG has also updated its Endorsement Status Report, which can be downloaded from its web site here.