Bernd Kremp
Partner
Our team of financial reporting specialists can help you understand IFRS 17 and then design and develop the processes to apply it effectively. We can also provide advice and guidance on any aspects of IFRS 17 that may be of particular concern. We will carry out a robust, independent impact assessment so that you can be confident you are taking all the necessary steps to comply with IFRS 17.
If you are implementing IFRS 17 and need support or advice, please get in touch using the form on this page. We look forward to discussing how we can help.
IFRS 17 Leases information and guidance
On this page, you will find a range of useful information and guidance to assist you and your business to apply IFRS 17 and manage its implications.
IFRS 17 Background
In May 2017, the IASB issued IFRS 17 Insurance Contracts to replace IFRS 4 Insurance Contracts. IFRS 17 has an effective date of 1 January 2023.
IFRS 17 is a comprehensive standard that introduces a consistent measurement model for insurance contracts It includes requirements concerning the measurement of fulfilment cash flows, current discount rates and the recognition of profit over the coverage period.
The key principles in IFRS 17 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 recognise and measure
- Recognises and measures groups of insurance contracts at:
- A risk-adjusted present value of the future cash flows (the fulfilment cash flows) that incorporates all the available information about the fulfilment cash flows in a way that is consistent with observable market information
- An amount representing the unearned profit in the group of contracts (the contractual service margin)
- Recognises the profit from a group of insurance contracts over the period the entity provides insurance cover, and as the entity is released from risk. If a group of contracts is or becomes loss-making, an entity recognises 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
- Piscloses information to enable users of financial statements to assess the effect that that contracts within the scope of IFRS 17 have on the financial position, financial performance and cash flows of an entity
IFRS 17 includes an optional simplified measurement approach, or premium allocation approach, for simpler insurance contracts.
BDO IFRS 17 publications
- 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.
The FRC issues thematic reviews of IFRS 17 that provide helpful guidance on implementing the new standard.
If you would like to talk to an expert on the implications of IFRS 17 and how to implement it effectively, please let us know by completing the form below. We will be in touch to discuss your challenges and how we can help. We look forward to talking to you.
