From 2023, the new insurance standard, IFRS 17 Insurance Contracts, will apply for all companies. This is because it applies to contracts, regardless of the issuer, and therefore all companies could be affected, not just insurers.
What’s the issue?
IFRS 17 contains more detailed, complex and prescriptive guidance for recognising, measuring and disclosing insurance contracts. The definition of an insurance contract will change from that under IFRS 4 Insurance Contracts, meaning that some contracts issued by companies could be an insurance contract, even if they are not called insurance contracts – e.g. product breakdown contracts or warranties.
What's the impact?
With changes to the definition of an insurance contract and additional scope exemptions under the new standard, accounting for contracts in the scope of IFRS 17 may be challenging for many companies. It is important for a company to determine now whether it issues any insurance contracts in the scope of IFRS 17.
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