IFRS 17 Insurance Contracts IFRS Standards Effects Analysis May 2017 This Effects Analysis accompanies, but is not part of, IFRS 17. What is the purpose of this Effects Analysis This Effects Analysis describes the likely costs and benefts of IFRS 17.The costs and benefts are collectively referred to as effectsˉ. The International Accounting Standards Board (the Board) gains insight into the likely effects of new or revised IFRS Standards through its exposure of proposals to stakeholders and through its analysis and consultation with them.This document describes the Boardˉs considerations of the effects of IFRS 17. Background The Board decided to proceed in two phases in establishing the accounting for insurance contracts:
uncertainty of future cash fows from insurance contracts.IFRS 4 allows insurance companies1 to continue to use various accounting practices, pending a fundamental reassessment of the accounting for insurance contracts. development of a comprehensive IFRS Standard for insurance contracts. IFRS 17 supersedes IFRS 4 and completes the Boardˉs project to establish a specifc IFRS model for the accounting for insurance contracts.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. Glossary Many terms used in this document are specifc to insurance.See the glossary on pages 134¨C138 for defnitions of those terms. 2| Effects Analysis | IFRS 17 Insurance Contracts | May 2017 1 In this document, the term companyˉ refers to an entity that prepares fnancial statements using IFRS Standards.The term insurerˉ or insurance companyˉ refers to an entity that issues insurance contracts as defned in IFRS 17. Effects Analysis | IFRS 17 Insurance Contracts | May 2017|3 US$110 trillion of total assets US$69 US$2 8US$13 Non-fnancial companies 25% Insurance companies 12% Other fnancial companies 63% The need for IFRS 17 IFRS 17 is the frst comprehensive and truly international IFRS Standard establishing the accounting for insurance contracts issued by a company.It replaces IFRS 4aan interim Standard.IFRS 4 does not prescribe the measurement of insurance contracts and instead allows companies to use local accounting requirements (national GAAP), or variations of those requirements, for the measurement of their insurance contracts issued. The insurance industry fulfls a central role in the global economy.Insurance companies enable people and companies to transfer risks.Moreover, insurers, like other institutional inves
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