Global Standards for the world economy

Thursday 21 September 2017

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Insurance Contracts

Insurance Contracts


 Insurance Contracts

Why did we undertake the project?

The aim of the insurance contracts project was to provide a single principle-based standard to account for all types of insurance contracts, including reinsurance contracts that an insurer holds. A single principle-based standard would enhance comparability of financial reporting among entities, jurisdictions and capital markets.

With existing accounting for insurance contracts, companies are not required to account for insurance contracts in one specific way. Instead, insurance contracts are accounted for differently across jurisdictions and may even be accounted for differently within the same company. Consequently, investors and analysts find it difficult to:

  1. identify which groups of insurance contracts are profit-making or loss-making; and
  2. analyse trend information about insurance contracts.

This project was completed in May 2017 with the issuance of IFRS 17 Insurance Contracts. IFRS 17 sets out the requirements that an entity should apply in reporting information about insurance contracts it issues and reinsurance contracts it holds. IFRS 17 is effective from 1 January 2021. A company can choose to apply IFRS 17 before that date but only if it also applies IFRS 9 Financial Instruments and IFRS 15 Revenue from Contracts with Customers.

IFRS 17 replaces an interim Standard—IFRS 4 Insurance Contracts—that was issued in March 2004.

Project stages

IASC deliberations

Consultation

Previous work done by the IASC.
Stage 1: completed 2001

Board deliberations

Issued documents

Stage 2: July 2001 to March 2004

Board deliberations

Issued documents

Stage 3: March 2004 to May 2007