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Insurance – IASB decides to amend IFRS 4

Insurance – IASB decides to amend IFRS 4

This IFRS newsletter brings you the latest on the IASB’s insurance project.


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We examine the latest developments and what the discussions could mean for you.

After several months of discussions, the IASB reached an important decision on the interaction between IFRS 4 Insurance Contracts and IFRS 9 Financial Instruments.

The Board tentatively decided to amend IFRS 4, permitting an entity to remove the impact of applying IFRS 9 from profit or loss, subject to certain limitations.


“Amending IFRS 4 will allow insurers to address much of the temporary volatility and accounting mismatches in profit or loss when implementing IFRS 9. However, other issues still exist.”


For more detail on these discussions, read Issue 47 of our IFRS Newsletter: Insurance. Previous issues can be found on our Newsletters web page.

Decision to amend IFRS 4

In June, the Board discussed the accounting consequences that could arise from an insurer implementing the forthcoming insurance contracts standard with an effective date after that of IFRS 9, including temporary volatility and accounting mismatches in profit or loss.

Having considered potential options to address these consequences, the Board tentatively decided to amend IFRS 4 to permit an entity to remove the impact of applying IFRS 9 from profit or loss, and recognise the impact in other comprehensive income.

This treatment would only be available for assets that:

  • were previously, or would have been, measured at amortised cost or classified as available-for-sale under IAS 39;
  • are classified at fair value through profit or loss under IFRS 9; and
  • relate to insurance activities.

The treatment could only be applied if the entity:

  • issues contracts that are accounted for under IFRS 4; and
  • applies IFRS 9 in conjunction with IFRS 4.

Other approaches being explored

The staff continue to explore other approaches to address the accounting consequences of applying IFRS 9 in advance of the forthcoming insurance contracts standard, including options to defer the effective date of IFRS 9.

Expected timeline

The staff expect to ask the IASB for the technical decisions on outstanding issues during the remainder of 2015.

The effective date of the final standard will be discussed after the IASB has concluded its redeliberations on other topics.

A final standard is not expected in 2015.

Visit our IFRS – Insurance hot topics page for the latest developments in the insurance contracts project.

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