Practical guidance and support

Our experienced team provides practical advice and support on all aspects of IFRS 17, helping organisations understand the standard and implement it effectively.

We support insurers and other organisations with matters including measurement of fulfilment cash flows, recognition of the contractual service margin, presentation of insurance revenue and expenses, and the implementation of the simplified premium allocation approach for simpler contracts.

For more about of how we can help, view our Financial Reporting Solutions page.

Overview of IFRS 17 ‘Insurance Contracts’

IFRS 17 provides a consistent framework for accounting for insurance contracts, ensuring that financial performance is reported transparently and comparably.

The standard requires entities to:

Recognise contracts that transfer significant insurance risk from the policyholder
Measure insurance contracts using fulfilment cash flows (risk-adjusted present value of expected future cash flows) and a contractual service margin (CSM) representing unearned profit
Recognise profit over the coverage period, while immediately recognising losses for loss-making contracts
Present insurance revenue, insurance service expenses, and finance income or expenses separately in the financial statements
Provide disclosures so users can understand the impact of insurance contracts on financial position, performance, and cash flows

For simpler contracts, IFRS 17 allows the Premium Allocation Approach (PAA) as a simplified measurement model, reducing measurement complexity while remaining compliant.

Key areas of focus under IFRS 17

Measurement of insurance contracts

Determining fulfilment cash flows, discount rates, and risk adjustments requires careful analysis and consistent application across portfolios.

Contractual service margin

The CSM represents unearned profit and must be systematically recognised over the coverage period. Adjustments for changes in estimates are made in line with IFRS 17 guidance.

Presentation and disclosure

IFRS 17 separates insurance revenue, insurance service expenses, and finance income or expenses, requiring clear presentation in the financial statements. Detailed disclosures help users understand the financial impact of insurance contracts.

Simplified approach for certain contracts

The Premium Allocation Approach (PAA) may be applied for contracts with short coverage periods or simpler insurance arrangements, reducing measurement complexity while maintaining compliance.

Common challenges in applying IFRS 17

Organisations frequently encounter practical and judgemental issues when implementing IFRS 17, including:

Measuring fulfilment cash flows and selecting appropriate discount rates
Determining the contractual service margin and recognising changes over time
Applying the PAA correctly for eligible contracts
Managing data requirements and system capabilities for large insurance portfolios
Presenting revenue, expenses and finance results consistently in the financial statements

Industry-specific considerations

While IFRS 17 primarily applies to insurers, some non-insurer organisations may also issue contracts that fall within the scope of the standard. These entities need to assess whether IFRS 17 applies and how it affects their financial reporting.

Key considerations for non-insurers include:

Warranties and product guarantees – contracts that transfer significant insurance risk may need to be measured and reported under IFRS 17.
Employee benefits with insurance risk – certain arrangements, such as group health or life benefits, may meet the definition of insurance contracts.
Other contracts with embedded insurance components – entities should identify and separate any insurance elements from other components, such as service or investment components, to ensure proper accounting under IFRS 17.
Understanding how IFRS 17 applies in these situations is essential to ensure accurate recognition, measurement, and disclosure of contracts that contain insurance risk.

IFRS 17 insights and publications

The following guides provide useful information and advice on IFRS 17:

IFRS at a Glance – IFRS 17 Insurance Contracts
A short ‘key facts’ document, setting out the key requirements under IFRS 17, the key application guidance, key definitions and disclosures

Implications of IFRS 17 for non-insurers
IFRS 17 fundamentally changes how insurance contracts are accounted for by insurers. This guidance deals with how non-insurers may be affected if they issue contracts that are within the scope of IFRS 17’s requirements, which may not always be readily apparent.

How we can help

Our specialists support organisations with a wide range of IFRS 17 matters, including:

Assessing whether contracts should be combined of components thereof separated
Evaluating the grouping of insurance contracts and recognition thereof
Measuring insurance contracts by reference to fulfilment cash flows
Determining and recognising the discount rate, risk adjustment, contractual service margin, coverage units and loss components
Implementing the Premium Allocation Approach and Variable Fee Approach for eligible contracts
Advising on when and how an insurance contract is modified and insurance acquisition cash flows are impaired
Considering the interplay of IFRS 9 ‘Financial Instruments’ and IFRS 17
Structuring the terms of an insurance contract so as to obtain a desired accounting outcome
Applying the requirements to reinsurance contracts held
Supporting reporting teams with presentation, disclosures, and technical accounting issues
Advising non-insurers on contracts that fall within the scope of IFRS 17 and the accounting thereof

If you would like to discuss a specific IFRS 17 issue or understand how the standard applies to your contracts, our specialists would be happy to help. Please contact our team to arrange a discussion.

IFRS 17 Insurance Contracts