Actions

IFRS17

Difference between revisions of "IFRS17"

(Created page with "Insurance contracts combine features of both a financial instrument and a service contract. In addition, many insurance contracts generate cash flows with substantial variabil...")
 
 
(4 intermediate revisions by the same user not shown)
Line 5: Line 5:
 
* Requires an entity to make an accounting policy choice of whether to recognize all insurance finance income or expenses in profit or loss or to recognize some of that income or expenses in other comprehensive income.
 
* Requires an entity to make an accounting policy choice of whether to recognize all insurance finance income or expenses in profit or loss or to recognize some of that income or expenses in other comprehensive income.
  
−
The key principles in IFRS 17 are that an entity:
+
The key principles in {{this}} are that an entity:
  
 
* Identifies as insurance contracts those contracts under which the entity 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;
 
* Identifies as insurance contracts those contracts under which the entity 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;
Line 17: Line 17:
 
* Discloses information to enable users of financial statements to assess the effect that contracts within the scope of {{this}} have on the financial position, financial performance and cash flows of an entity.
 
* Discloses information to enable users of financial statements to assess the effect that contracts within the scope of {{this}} have on the financial position, financial performance and cash flows of an entity.
  
−
{{this}} is effective for annual reporting periods beginning on or after 1 January 2023 with earlier application permitted as long as IFRS 9 is also applied.
+
{{this}} is effective for annual reporting periods beginning on or after 1 January 2023 with earlier application permitted as long as [[Link::t:IFRS09]] is also applied. See also: [[Link::t:IFRS04]]
  
  
Line 30: Line 30:
 
|sort=00017
 
|sort=00017
 
|level=1
 
|level=1
−
|keywords=IFRS, Standard, Financial, Reporting, GAAP
+
|keywords=IFRS, Standard, Financial, Reporting, GAAP, Insurance, Contract, Risk, Return, Income, Profitability
−
|description=IFRS 17 requires an entity to disclose the returns and risks related to insurance contracts it entered
+
|description=IFRS 17 requires an entity to disclose the returns and risks related to insurance contracts issued or entered
 
}}
 
}}

Latest revision as of 23:53, 20 August 2020

Insurance contracts combine features of both a financial instrument and a service contract. In addition, many insurance contracts generate cash flows with substantial variability over a long period. To provide useful information about these features, IFRS 17 Insurance Contracts:

  • Combines current measurement of the future cash flows with the recognition of profit over the period that services are provided under the contract;
  • Presents insurance service results (including presentation of insurance revenue) separately from insurance finance income or expenses; and
  • Requires an entity to make an accounting policy choice of whether to recognize all insurance finance income or expenses in profit or loss or to recognize some of that income or expenses in other comprehensive income.

The key principles in IFRS 17 Insurance Contracts are that an entity:

  • Identifies as insurance contracts those contracts under which the entity 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;
  • Separates specified embedded derivatives, distinct investment components and distinct performance obligations from the insurance contracts;
  • Divides the contracts into groups that it will recognize and measure;
  • Recognizes and measures groups of insurance contracts at:
    1. A risk-adjusted present value of the future cash flows (the fulfillment cash flows) that incorporates all of the available information about the fulfillment cash flows in a way that is consistent with observable market information; plus (if this value is a liability) or minus (if this value is an asset)
    2. An amount representing the unearned profit in the group of contracts (the contractual service margin);
  • Recognizes the profit from a group of insurance contracts over the period the entity provides insurance contract services, and as the entity is released from risk. If a group of contracts is or becomes loss-making, an entity recognizes the loss immediately;
  • Presents separately insurance revenue (that excludes the receipt of any investment component), insurance service expenses (that excludes the repayment of any investment components) and insurance finance income or expenses; and
  • Discloses information to enable users of financial statements to assess the effect that contracts within the scope of IFRS 17 Insurance Contracts have on the financial position, financial performance and cash flows of an entity.

IFRS 17 Insurance Contracts is effective for annual reporting periods beginning on or after 1 January 2023 with earlier application permitted as long as IFRS 9 Financial Instruments is also applied. See also: IFRS 4 Insurance Contracts


IFRS 17 Insurance Contracts is Copyright: IFRS Foundation Discuss Contract Custom Solution

Hierarchy

IDNameLevelx
IFRSInternational Financial Reporting Standards0IFRS
IFRS17IFRS 17 Insurance Contracts1IFRS17

Term(s)

IDNameClearx
IAS39IAS 39 Recognition & Measurement*IAS39
IFRS04IFRS 4 Insurance ContractsIFRS04
IFRS09IFRS 9 Financial InstrumentsIFRS09
IFRS 17 Insurance Contracts International Financial Reporting Standards 00017 1 IFRS, Standard, Financial, Reporting, GAAP, Insurance, Contract, Risk, Return, Income, Profitability IFRS 17 requires an entity to disclose the returns and risks related to insurance contracts issued or entered

Retrieved from "https://dev.orwiki.org/index.php?title=t:IFRS17&oldid=6630"