LONDON--(BUSINESS WIRE)--The International Accounting Standards Board (IASB) has been considering amendments to the published IFRS 17 accounting standard for insurance contracts.
An exposure draft was published by the IASB in June 2019 which acted to re-open the standard. The IASB has reached a series of important decisions, including amendments to the May 2017 document, ahead of the publication of a revised standard scheduled to take place by 30 June 2020.
In its new Best’s Commentary, “IFRS 17: IASB Decisions Impact Insurers and Users of Accounting Data”, AM Best has reviewed some of the IASB’s recent decisions to consider how they will affect (re)insurers’ reporting under IFRS 17 and their implications for users of (re)insurers’ financial reporting.
The commentary looks in particular at the following decisions:
- Effective date 2023 – considerations that led the IASB’s to change the standard’s effective date from the proposal in the exposure draft;
- Deferred acquisition costs – their reappearance in the balance sheet accounting of insurance contracts under IFRS 17;
- Annual cohort records – confirmation that they will be required for all participating business;
- Loss-making policies – changes to the definition of policies treated as loss making; and
- Contractual service margin – some significant mismatches between assets and liabilities, arising from whether or not the contractual service margin is used, have been eliminated.
Tony Silverman, associate director, AM Best Europe Rating Services, said, “In general, these decisions will affect the data AM Best expects to receive from (re)insurers. AM Best will be evolving its collection and assessment of accounting data in line with its use of the data as a means of targeting the underlying economics of (re)insurers. Consequently AM Best does not expect any near-term impact from IFRS 17 on credit ratings.”
To access a complimentary copy of this commentary, please visit http://www3.ambest.com/bestweek/purchase.asp?record_code=296643.
AM Best is a global credit rating agency, news publisher and data analytics provider specialising in the insurance industry. Headquartered in the United States, the company does business in over 100 countries with regional offices in New York, London, Amsterdam, Dubai, Hong Kong, Singapore and Mexico City. For more information, visit www.ambest.com.
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