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Board addresses sweep issues before final standard

As it prepares to issue the final version of IFRS 17 Insurance Contracts by the end of June 2020, the International Accounting Standards Board (the Board) discussed six sweep issues at its May meeting:

  • VFA – Applying the OCI option and the risk mitigation option together;
  • Reinsurance – Recovery of losses on onerous underlying contracts;
  • Insurance revenue – income tax;
  • Definitions of liability for remaining coverage and liability for incurred claims;
  • Assets and liabilities recognised before a group is recognised; and
  • Treatment of unexpected payment or non-payment of investment components

The Board papers addressed the risk mitigation issue in depth, but the other five items were limited to fine-tuning the wording in the revised IFRS 17.

Moving forward with implementation

The effective date for IFRS 17 Insurance Contracts is now 1 January 2023. During the current COVID-19 lockdown, many insurers are working innovatively to continue their testing programmes and it will be critical to continue this to achieve a full year of parallel running of new systems.

In our latest podcast, KPMG's global insurance accounting change lead, Mary Trussell, speaks with Bob Owel, a director in KPMG's International Standards Group, and explains that the more insurers have done to focus on their IFRS 17 preparations, the more concerned they are about meeting that 2023 effective date.

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