Introduction IFRS 17
was released in May 2017 and it is quite a complex standard. The standard replaces IFRS 4 (Insurance Contracts) – an interim standard – which does not particularly prescribe a measurement policy for insurance contracts. If you take a look at various insurance contracts around the world, you would find that they are accounted for using different measurement frameworks. What the new standard does is that it tries to achieve a consistent insurance accounting framework, which inevitably means that there are a lot of changes for everyone who issue insurance contracts. This newsletter highlights the key provisions of IFRS 17, including its scope, recognition requirements, measurement models, disclosure requirements as well as an overview of the impact of the new standard.
Definition of insurance contract
The definition is the same as under IFRS 4 which is a contract under which one party (the insurer) accepts significant insurance risk from another party (the policyholder) by agreeing to compensate the policyholder if a specified uncertain future event (the insured event) adversely affects the policyholder.
