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The Actuary The magazine of the Institute & Faculty of Actuaries

New IFRS 17 amendments published

The International Accounting Standards Board (IASB) has today published six proposed changes to IFRS 17 following pressure from the insurance industry.

Changes proposed for new accounting standard ©iStock
Changes proposed for new accounting standard ©iStock

Its new exposure draft (ED) contains a proposal to defer the effective date of IFRS 17 by one year to January 2022, along with additional scope exclusions for loans and credit cards.

Deferral of some insurance acquisition cash flows for newly issued contracts, and recognition of profit for contracts combining investment services and insurance are also mooted.

Changing the accounting of certain onerous reinsurance contracts, and extending the risk mitigation option to include the use of reinsurance to mitigate financial risk are proposed too.

Stakeholders have until 25 September to respond to the amendments and make suggestions.

IASB chair, Hans Hoogervost, said: “Moving to IFRS 17 is a big task and this proposed package of amendments will help insurers in their ongoing implementation of the new standard.”

This comes after nine insurance organisations wrote a letter to the IASB last year warning of “serious operational constraints” on insures’ ability to meet the IFRS 17 implementation date.

The group also highlighted a range of concerns they had with the standard, including measurements of discount rates and acquisition cash flows.

Willis Towers Watson (WLTW) said today’s amendments address a number of the issues raised, and warned that they could have significant implications for insurers.

However, the changes could require a further postponement to the implementation date of IFRS 17, which the IASB is thought to strongly oppose.

WLTW senior director, Kamran Foroughi, said that some concerns raised by insurers have not been addressed, and that stakeholders would “continue to push for change”.

“In our experience, life, property/casualty and composite insurers are focusing on solving operational and technology implementation challenges, which are largely unaffected by the ED,” he said.

“As well as considering the ED proposals, we believe firms should continue with implementation projects to address these challenges.”

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