IFRS 17 - Insurance Contract: What has really Changed?

Background

The International Accounting Standards Board (IASB) issued IFRS 17 Insurance Contract in May 2017 as a replacement for IFRS 4 Insurance Contract. The standard was issued to correct the frailties in IFRS 4 and to provide a comprehensive framework for the recognition, measurement, presentation and disclosure of insurance contracts. The objective of IFRS 17 is to ensure that entities provide relevant information that faithfully represents their insurance contracts.

Before now, IFRS 4, being an interim standard, allowed insurers to still adopt accounting practices developed from local GAAPs in accounting for insurance contracts. This made comparability of financial statement across industries and countries impossible. Also, IFRS 4 did not ensure adequate information is provided to aid decision making of investors and other users.

In light of these failings of IFRS 4, the IASB completed its phase II project and issued IFRS 17 in May 2017. IFRS 17 is effective for annual reporting periods beginning on or after 1 January 2023.