EY | July 2, 2018
IFRS 17 Insurance Contracts (IFRS 17 or the standard) represents a fundamental change to accounting practice for most entities issuing insurance contracts and is expected to require significant implementation effort.
During its June meeting, the International Accounting Standards Board (IASB or the Board) discussed and agreed to several proposed narrow-scope amendments to IFRS 17. These minor changes are intended to ensure the wording of the standard is consistent with the decisions that the IASB made in the development of the standard.
What you need to know:
- The IASB agreed to staff proposals to include several minor changes to IFRS 17 in its next Annual Improvements Cycle. These narrow-scope amendments address instances where the drafting of IFRS 17 did not achieve what the Board intended.
- One change will clarify that investment-related services are to be considered in determining the coverage period for allocation of the contractual service margin to profit or loss for contracts with direct participation features (accounted for under the variable fee approach). This change does not apply to contracts accounted for under the general model or the premium allocation approach.
- The IASB clarified that the requirements in IFRS 17 on how to account for insurance contracts acquired in a business combination do not apply to business combinations between entities under common control.
- The requirement to assess on acquisition date whether contracts acquired in a business combination are insurance contracts will apply only to business combinations that occur after the date of initial application of IFRS 17.
- In addition, the Board agreed to six other amendments.
To find out more, please read EY’s Insurance Accounting Alert here.