Accounting for insurance contracts
On 18 May 2017, the IASB published IFRS 17 – Insurance Contracts. This marks the end of the last major standard-setting project of the past decade.
Keywords: Mazars, Thailand, IFRS 17, Accounting for Insurance Contracts, IFRS 15, IFRS 9, IFRS 4, IASB
7 July 2017
IFRS 17 will replace the interim standard IFRS 4, for financial periods commencing on or after 1 January 2021. IFRS 4 was published in 2005 and, rather than setting out specific IFRS accounting principles, it permitted insurers to continue applying their local accounting framework.
This meant that users of financial statements were unable to make meaningful comparisons between different entities in this sector.
IFRS 17 aims to address this by:
- requiring consistent accounting treatments for the various different types of insurance contract; and
- measuring insurance liabilities at their present value using an approach similar to Solvency II.
Given the huge range of existing practices, the impact of the standard will vary from one company to another. The IASB has published an effects analysis along with the standard to this effect. In the large majority of cases, the standard will fundamentally change the accounting policies for measuring, presenting and recognising insurance contracts, meaning there are big challenges for insurers in terms of implementing the standard and the related financial reporting.
To support implementation of the new standard, the IASB has decided to form a Transition Resource Group, as it did for IFRS 15 – Revenue from Contracts with Customers and for IFRS 9 on impairment of financial instruments. The IASB has launched a call for nominations for the group. In addition, the IASB has created a dedicated webpage for supporting implementation of the standard, on which it will post articles, presentations, webcasts and so on, as well as the effects analysis and a summary of the project.
Stakeholders can also send questions to a dedicated email address, which is also listed on this page.