IFRS 17 Insurance Contracts

The International Accounting Standards Board (IASB) has issued IFRS 17 Insurance Contracts

IFRS 17 replaces IFRS 4, which was brought in as an interim Standard in 2004. IFRS 4 has given companies dispensation to carry on accounting for insurance contracts using national accounting standards, resulting in a multitude of different approaches. As a consequence, it is difficult for investors to compare and contrast the financial performance of otherwise similar companies.

IFRS 17 is intended to solve the comparison problems created by IFRS 4 by requiring all insurance contracts to be accounted for in a consistent manner.  It requires Insurance obligations to be accounted for using current values instead of historical cost, and updated regularly.

IFRS 17 has an effective date of periods beginning on or after 1 January 2021.  It can be adopted early, although European entities must wait for the standard to be endorsed by the European Union before it can be adopted.

Other materials accompanying the Standard include:

• Effects Analysis—which outlines in detail the expected costs and benefits of the new Standard;
• Project Summary—providing an overview of the project to develop the new insurance contracts Standard;
• Feedback Statement—summarising the feedback received to the different consultations undertaken as part of the project; and
• Proposed IFRS taxonomy update, which has a comment deadline of 18 September 2017.

These accompanying materials are available from the IASB web site here.