This IFRS newsletter brings you the latest on the IASB’s insurance project.
A number of decisions have been reached on the IASB’s planned response to the differing effective dates of the forthcoming insurance contracts standard and IFRS 9 Financial Instruments.
Many decisions were also reached on participating contracts. The Board focused on:
At its September meeting, the Board agreed to propose an optional deferral of the IFRS 9 effective date at the reporting entity level for companies whose predominant activity is issuing contracts in the scope of IFRS 4 Insurance Contracts.
“The Board’s decision to permit a deferral of IFRS 9 increases the pressure to bring an end to the insurance contracts project.”
Such companies would be able to defer application of IFRS 9 no later than reporting periods beginning on or after 1 January 2021.
Before and after this date, any company issuing contracts in the scope of IFRS 4 could apply the ‘overlay approach’ – which would consist of interim amendments to IFRS 4 – in conjunction with IFRS 9, if the forthcoming insurance contracts standard is not yet effective.
The Board also reached a number of other decisions on the overlay approach in September. It will seek feedback on the deferral and overlay approaches later this year.
The Board analysed its earlier decisions on non-participating contracts, and tailored them to participating contracts.
It reached a number of decisions on disaggregating changes in the measurements of participating contracts caused by changes in market variables.
The Board also reached a decision to address the accounting mismatches that could arise when a company:
The Board has now completed most of its redeliberations. The remainder, which include evaluating the differences between the general model and the variable fee approach, and the presentation and disclosure requirements, are expected to be completed soon.
An effective date will not be discussed until all other redeliberations have been completed. The Board expects to issue the forthcoming insurance contracts standard in 2016.
Visit our IFRS – Insurance hot topics page for the latest developments in the insurance contracts project.
© 2021 KPMG KPMG Huazhen LLP, a People's Republic of China partnership, KPMG Advisory (China) Limited, a limited liability company in China, KPMG, a Macau partnership and KPMG, a Hong Kong partnership, are member firms of the KPMG global organisation of independent member firms affiliated with KPMG International Limited, a private English company limited by guarantee. All rights reserved.
The KPMG name and logo are trademarks used under license by the independent member firms of the KPMG global organisation.
For more detail about the structure of the KPMG global organisation please visit https://home.kpmg/governance.