2017年-德勤中国_IFRS17_12页_219kb

IFRS 17 – Insurance Contracts Summary

Core Content

IFRS 17 is a new international accounting standard issued by the IASB that replaces IFRS 4 Insurance Contracts. It introduces a comprehensive framework for the recognition, measurement, presentation, and disclosure of insurance contracts, including reinsurance contracts and investment contracts with a discretionary participation feature (DPF). The standard aims to enhance transparency and comparability across insurers by applying a principle-based approach.

Main Features of IFRS 17

• General Model: This model is used to measure insurance contracts and includes:

  • Estimation of future cash flows based on current assumptions.
  • Explicit measurement of risk, including both financial and non-financial risks.
  • Discounting of future cash flows using rates that reflect the time value of money and the characteristics of the insurance contract.
  • Deferral and systematic recognition of profit over the coverage period.

• Premium Allocation Approach (PAA): A simplified version of the General Model, applicable to contracts with a coverage period of one year or less. It measures the liability for remaining coverage based on the initial premiums received, adjusted for changes in the group composition and amortisation of acquisition costs.

• Variable Fee Approach (VFA): Used for insurance contracts with direct participation features (direct par insurance contracts). It adjusts the contractual service margin (CSM) based on changes in the fair value of underlying items, excluding the variable fee for services.

Scope

• IFRS 17 applies to:
  • Insurance contracts issued and held.
  • Investment contracts with a DPF, provided the entity also issues insurance contracts.
• Contracts with a fixed fee structure may be excluded if they meet specific conditions related to the nature of the service provided and the risk transferred.

Level of Aggregation

• Entities must identify portfolios of insurance contracts based on similar risks and management.
• Each portfolio is divided into three groups:
  • Onerous contracts (net outflow at initial recognition).
  • Contracts not expected to become onerous.
  • Remaining contracts.
• Groups are established at inception and not reassessed later.

Recognition and Measurement

• Recognition: Insurance contracts are recognised from the earliest of:
  • The beginning of the coverage period.
  • The date when the first payment from a policyholder becomes due.
  • When the contract becomes onerous.
• Measurement: The liability for remaining coverage is measured as the sum of the future cash flows (FCF) and the contractual service margin (CSM). The liability for incurred claims is based on past services and claims.

Key Changes by Insurance Type

Non-Life Insurance

• Introduction of discounting and explicit risk adjustments for non-financial risk.
• More transparent reporting of movements in liability elements.
• PAA is applicable for contracts with a coverage period of one year or less.

Life Insurance

• Single accounting model for all insurance contracts.
• Updated assumptions rather than locked-in rates.
• Current value measurement of guarantees and options.
• Enhanced disclosure of risk effects.
• Deferred acquisition costs replace separate release mechanisms.

Disclosure Requirements

• Entities must disclose:
  • Qualitative and quantitative information about amounts related to insurance contracts.
  • Significant judgements and changes in those judgements.
  • Nature and extent of risks arising from insurance contracts.
• Extensive disclosures are also required for transition to the new standard.

Effective Date and Transition

• IFRS 17 is effective for annual periods beginning on or after 1 January 2021.
• Early application is permitted for entities applying IFRS 9 and IFRS 15 before the effective date.
• Transition is applied retrospectively unless impracticable, in which case the modified retrospective approach or fair value approach may be used.

Observations

• IFRS 17 is expected to significantly impact insurance processes and systems.
• The level of aggregation is simplified compared to earlier proposals but remains a challenging aspect of implementation.
• The PAA is likely to be widely adopted by non-life insurers, particularly for short-term contracts.
• Transition requirements, especially for entities with long-standing liabilities, are complex and require careful planning.

Key Contacts

Conclusion

IFRS 17 introduces a more consistent, transparent, and principle-based approach to accounting for insurance contracts, replacing the previous IFRS 4. It requires significant changes in processes, systems, and disclosures, with a focus on the time value of money, risk adjustments, and systematic profit recognition. The standard is effective from 1 January 2021, and its implementation involves substantial coordination across departments and careful consideration of transition methods.