Q1: What is IFRS 17?
IFRS 17 is an International Financial Reporting Standard that provides guidance on accounting for insurance contracts. It replaces the previous insurance accounting standard, IFRS 4.
Q2: When is IFRS 17 effective?
IFRS 17 became effective for annual reporting periods beginning on or after January 1, 2022.
Q3: What is the core principle of IFRS 17?
The core principle of IFRS 17 is to provide transparent and consistent information about an entity's insurance contracts, by requiring the recognition of assets and liabilities arising from insurance contracts on the balance sheet.
Q4: What is the scope of IFRS 17?
IFRS 17 applies to all insurance contracts, including reinsurance contracts and investment contracts with discretionary participation features, issued by an entity.
Q5: How does IFRS 17 define an insurance contract?
IFRS 17 defines an insurance contract as a contract that transfers significant insurance risk from one party (the policyholder) to another party (the insurer), and requires the insurer to compensate the policyholder if a specified uncertain future event (the insured event) adversely affects the policyholder.
Q6: What is the measurement model under IFRS 17?
The measurement model under IFRS 17 consists of three building blocks: (1) the fulfillment cash flows, which represent the expected future cash flows that arise as the insurer fulfills its obligations under the insurance contract; (2) the contractual service margin (CSM), which represents the unearned profit that the insurer will recognize as it fulfills its obligations under the contract; and (3) the discount rate, which is used to present value the fulfillment cash flows.
Q7: How does IFRS 17 address transition to the new standard?
IFRS 17 includes specific requirements for transition to the new standard, including retrospective application of the standard or modified retrospective application.
Q8: What are the disclosure requirements under IFRS 17?
The disclosure requirements under IFRS 17 include information about an entity's insurance contracts, including the amount, timing, and uncertainty of cash flows arising from insurance contracts, and the methods, assumptions, and inputs used to measure insurance contracts.
Q9: What is the impact of IFRS 17 on financial statements?
IFRS 17 has a significant impact on an entity's financial statements, as it requires insurers to recognize assets and liabilities arising from insurance contracts on the balance sheet. This can affect key financial ratios, such as leverage and return on equity. Additionally, entities may need to revise their accounting policies and processes, and disclose more detailed information about their insurance contracts.