IFRS 17 to be Amended after Concerns by Insurance Companies
A month after extending implementation of IFRS 17 to 2022, the International Accounting Standards Board has agreed to pursue the probability of making an amendment to the regulation after some insurers raised a number of concerns.
IASB’s board is deliberating on changing some aspects on presentational requirements for insurance contracts on balance sheets. There is a possibility that the level of aggregation for presenting contracts as assets or liabilities will be significantly raised in order to reduce implementation costs.
Insurance companies had presented 12 additional concerns, which were rejected for consideration, as they did not meet agreed criteria for amendment.
The ability to offset insurance contract assets and liabilities, particularly for contracts measured using the premium allocation approach (PAA), at the proposed portfolio level would have represented a challenge to the underwriters.
“It will alleviate concerns raised by P&C insurers around the need to produce incurred claims estimates at a group and cohort level, which would have represented a major change,” Willis Towers Watson (WLTW) senior director, Roger Gascoigne, was quoted by The Actuary.
During the board meeting, members touched on proposals to change the basis of recognition of premiums in PAA from ‘received’ to ‘due’, and broadening the applicability of the variable fee approach.
It was however decided to defer any decisions related to the variable fee approach and other transition issues until future meetings, expected early next year.
In November, IASB voted to delay the implementation deadline for IFRS 17 by one year to 1 January 2022.
Implementation for IFRS 9 was also pushed to 2022. Insurers had argued they faced “serious operational constraints” on their ability to meet the original 2021 date.
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