Podcast: Level of aggregation, IFRS 4 Phase 2 | KPMG Global
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Viewpoint Podcast: ‘Level of aggregation’ under IFRS 4 Phase 2 for insurers

Podcast: Level of aggregation, IFRS 4 Phase 2

With this year’s anticipated finalization of IFRS 4 Phase 2 accounting for insurance contacts, there has been significant interest among insurers globally regarding the key features of the new standard.


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While the concept of ‘level of aggregation’ may seem somewhat technical and esoteric, it is one of the key drivers of profit recognition under the new standard. The extent to which contracts are aggregated may have a significant impact on the statement of comprehensive income of an insurance entity, and on its systems, processes and data.

Topics covered in this podcast

  • When an entity will be required to dis-aggregate contracts, including a discussion of onerous contracts and allocation of the contractual service margin.
  • The anticipated financial impact on the statement of comprehensive income at transition and going forward.
  • The impact decisions surrounding level of aggregation will have on an entity’s systems, processes and data.

Considerations going forward

The IASB’s final decisions and guidance on ‘level of aggregation’ will only be known when the standard is published, insurance entities should start to consider how they might interpret the guidance available and meet the considerable challenge of increased granularity. In particular, entities should:

  • Understand the current level of aggregation for different products and identify those that may require separation under the new standard — e.g. depending on profitability or key risk drivers such as gender, age, illness history, smoking status of the policyholders.
  • Undertake initial investigations into the availability of required data and functionality of existing systems, and identify areas likely to be impacted as a result of changes to the current level of aggregation.

If you would like to discuss any of the ideas raised – or to discuss your organization’s IFRS 4 Phase 2 implementation plan, please contact your local KPMG office.

We hope you find this podcast of interest. Watch for our next podcast, coming soon.

For further reading on this topic please see our article – Level of aggregation under IFRS 4 Phase 2 for insurance contracts.

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