IFRS 17 Insurance Contracts — Complete Reference

Objective

Para 1 IFRS 17 Insurance Contracts establishes principles for the recognition, measurement, presentation and disclosure of insurance contracts within the scope of the Standard. The objective of IFRS 17 is to ensure that an entity provides relevant information that faithfully represents those contracts. This information gives a basis for users of financial statements to assess the effect that insurance contracts have on the entity’s financial position, financial performance and cash flows.

Para 2 An entity shall consider its substantive rights and obligations, whether they arise from a contract, law or regulation, when applying IFRS 17. A contract is an agreement between two or more parties that creates enforceable rights and obligations. Enforceability of the rights and obligations in a contract is a matter of law. Contracts can be written, oral or implied by an entity’s customary business practices. Contractual terms include all terms in a contract, explicit or implied, but an entity shall disregard terms that have no commercial substance (ie no discernible effect on the economics of the contract).

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Scope

Para 3 An entity shall apply IFRS 17 to:
(a) insurance contracts, including reinsurance contracts, it issues;
(b) reinsurance contracts it holds; and
(c) investment contracts with discretionary participation features it issues, provided the entity also issues insurance contracts.

TDescription of insurance contract

Para 4 All references in IFRS 17 to insurance contracts also apply to: (a) reinsurance contracts held, except: (i) for references to insurance contracts issued; and (ii) as described in paragraphs 60–70A. (b) investment contracts with discretionary participation features as set out in paragraph 3(c), except for the reference to insurance contracts in paragraph 3(c) and as described in paragraph 71.

TDescription of reinsurance contract

Para 5 All references in IFRS 17 to insurance contracts issued also apply to insurance contracts acquired by the entity in a transfer of insurance contracts or a business combination other than reinsurance contracts held.

Para 6 Appendix B provides guidance on the definition of an insurance contract (see paragraphs B2–B30).

Exclusions from scope (Paragraphs 7–8A)

Para 7 An entity shall not apply IFRS 17 to:
(a) warranties provided by a manufacturer, dealer or retailer in connection with the sale of its goods or services to a customer (see IFRS 15).
(b) employers’ assets and liabilities from employee benefit plans (see IAS 19 and IFRS 2) and retirement benefit obligations reported by defined benefit retirement plans (see IAS 26).
(c) contractual rights or obligations contingent on the future use of, or the right to use, a non-financial item.
(d) residual value guarantees provided by a manufacturer, dealer or retailer and a lessee’s residual value guarantees when embedded in a lease.
(e) financial guarantee contracts, unless the issuer has previously asserted explicitly that it regards such contracts as insurance contracts and has used accounting applicable to insurance contracts.
(f) contingent consideration payable or receivable in a business combination (see IFRS 3).
(g) insurance contracts in which the entity is the policyholder, unless those contracts are reinsurance contracts held.
(h) credit card contracts, or similar contracts that provide credit or payment arrangements, that meet the definition of an insurance contract if, and only if, the entity does not reflect an assessment of the insurance risk associated with an individual customer in setting the price.

Para 8 Some contracts meet the definition of an insurance contract but have as their primary purpose the provision of services for a fixed fee. An entity may choose to apply IFRS 15 instead of IFRS 17 to such contracts if: (a) the entity does not reflect an assessment of the risk associated with an individual customer in setting the price; (b) the contract compensates the customer by providing services, rather than by making cash payments; and (c) the insurance risk transferred arises primarily from the customer’s use of services.

Para 8A An entity may choose to apply IFRS 17 to contracts that meet the definition of an insurance contract but that limit the compensation for insured events to the amount otherwise required to settle the policyholder’s obligation created by the contract (for example, loans with death waivers). The entity shall make that choice for each portfolio of insurance contracts, and the choice for each portfolio shall be irrevocable.

Combination of insurance contracts

Para 9 A set or series of insurance contracts with the same or a related counterparty may achieve, or be designed to achieve, an overall commercial effect. In order to report the substance of such contracts, it may be necessary to treat the set or series of contracts as a whole.

Separating components from an insurance contract

Para 10 An insurance contract may contain one or more components that would be within the scope of another Standard if they were separate contracts. For example, an insurance contract may include an investment component or a component for services other than insurance contract services (or both). An entity shall apply paragraphs 11–13 to identify and account for the components of the contract.

Para 11 An entity shall:
(a) apply IFRS 9 to determine whether there is an embedded derivative to be separated and, if there is, how to account for that derivative.
(b) separate from a host insurance contract an investment component if, and only if, that investment component is distinct (see paragraphs B31–B32). The entity shall apply IFRS 9 to account for the separated investment component.

TDescription of investment component separatio...

Para 12 After separating any cash flows applying paragraph 11, an entity shall apply IFRS 17 to all remaining components of the host insurance contract. All references in IFRS 17 to embedded derivatives refer to derivatives that have not been separated from the host insurance contract and all references to investment components refer to investment components that have not been separated from the host insurance contract (except those references in paragraph 11(b)).

Para 13 An entity shall not separate from an insurance contract a component that would be within the scope of IFRS 17 if it were a separate contract. Instead, the entity shall apply IFRS 17 to the combined component.

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Level of Aggregation of Insurance Contracts

Para 14 An entity shall identify portfolios of insurance contracts. A portfolio comprises contracts subject to similar risks and managed together. Contracts within a product line would be expected to have similar risks and hence would be expected to be in the same portfolio if they are managed together.

TDescription of portfolios of insurance contra...

Para 15 Contracts within the same product line would be expected to have similar risks. Contracts in different product lines (for example, single premium fixed annuities compared with regular term life insurance) would not be expected to have similar risks and hence would be expected to be in different portfolios.

Para 16 An entity shall divide a portfolio of insurance contracts issued into a minimum of:
(a) a group of contracts that are onerous at initial recognition, if any;
(b) a group of contracts that at initial recognition have no significant possibility of becoming onerous subsequently, if any; and
(c) a group of the remaining contracts in the portfolio, if any.

TDescription of groups of insurance contracts

Para 17 If an entity has reasonable and supportable information to conclude that a set of contracts will all be in the same group applying paragraph 16, it may measure the set of contracts to determine if the contracts are onerous (see paragraph 47) and assess the set of contracts to determine if the contracts have no significant possibility of becoming onerous subsequently. If an entity does not have reasonable and supportable information to conclude that a set of contracts will all be in the same group, it shall determine the group to which contracts belong by considering individual contracts.

Para 18 For contracts issued to which an entity applies the premium allocation approach (see paragraphs 53–59), the entity shall assume no contracts in the portfolio are onerous at initial recognition, unless facts and circumstances indicate otherwise.

Para 19 If contracts within a portfolio would fall into different groups only because law or regulation specifically constrains the entity’s practical ability to set a different price or level of benefits for policyholders with different characteristics, the entity may include those contracts in the same group. The entity shall not apply this paragraph by analogy to other items.

Para 20 An entity is permitted to subdivide the groups described in paragraph 16. For example, an entity may choose to divide the contracts into: (a) more groups that are not onerous—if the entity’s internal reporting provides information that distinguishes between different levels of profitability; or (b) more groups that are not onerous at initial recognition but that have different likelihoods of changes in assumptions subsequently.

Para 21 An entity shall not include contracts issued more than one year apart in the same group.

Para 22 An entity shall not include contracts issued more than one year apart in the same group. To achieve this the entity shall, if necessary, further divide the groups described in paragraphs 16–21.

TDescription of groups of insurance contracts

Para 23 An entity shall apply paragraphs 14–22 to reinsurance contracts held, with the exception that references to onerous contracts shall be replaced with references to contracts on which there is a net gain on initial recognition. For some reinsurance contracts held, applying paragraphs 14–22 would result in a group that comprises a single contract.

Para 24 An entity shall apply the recognition and measurement requirements of IFRS 17 to the groups of contracts determined by applying paragraphs 14–23. An entity shall establish the groups at initial recognition and add contracts to the groups applying paragraph 28. The entity shall not reassess the composition of the groups subsequently.

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Recognition

Para 25 An entity shall recognise a group of insurance contracts it issues from the earliest of the following:
(a) the beginning of the coverage period of the group of contracts;
(b) the date when the first payment from a policyholder in the group becomes due; and
(c) for a group of onerous contracts, when the group becomes onerous.

TDescription of recognition of insurance contr...

Para 26 An entity shall not account for any contract that meets the criteria for recognition until the date on which the contract is first recognised in accordance with paragraph 25, unless the entity chooses to recognise a group of insurance contracts on any date before the date specified in paragraph 25 provided facts and circumstances exist.

Para 27 If there is no contractual due date, the first payment from the policyholder is deemed to be due when it is received.

Para 28 An entity shall add a contract to the group in the reporting period in which the contract meets one of the criteria set out in paragraph 25. This may result in a change to the determination of the discount rates at the date of initial recognition applying paragraph B72(b). An entity shall apply the revised rates from the start of the reporting period in which the new contracts are added to the group.

TDescription of recognition of insurance contr...

Insurance acquisition cash flows

Para 28A An entity shall allocate insurance acquisition cash flows to groups of insurance contracts using a systematic and rational method applying paragraphs B35A–B35B, unless it chooses to recognise them as expenses applying paragraph 59(a).

Para 28B An entity shall recognise an asset for insurance acquisition cash flows paid (or for which a liability has been recognised applying another IFRS Standard) before the related group of insurance contracts is recognised. An entity shall recognise such an asset for each related group of insurance contracts.

Para 28C An entity shall derecognise an asset for insurance acquisition cash flows when the insurance acquisition cash flows are included in the measurement of the related group of insurance contracts applying paragraph 38(c)(i) or paragraph 55(a)(ii).

Para 28D If paragraph 28 applies, an entity shall apply paragraphs 28B–28C applying the revised discount rates at the date of initial recognition described in paragraph B72(b).

Para 28E At the end of each reporting period, an entity shall assess the recoverability of an asset for insurance acquisition cash flows if facts and circumstances indicate the asset may be impaired (see paragraph B35D). If an entity identifies an impairment loss, the entity shall adjust the carrying amount of the asset and recognise the impairment loss in profit or loss.

Para 28F An entity shall recognise in profit or loss a reversal of some or all of an impairment loss previously recognised applying paragraph 28E and increase the carrying amount of the asset, to the extent that the impairment conditions no longer exist or have improved.

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Measurement

Para 29 Paragraphs 30–52 apply to insurance contracts without direct participation features, unless otherwise specified. Paragraphs 53–59 set out the premium allocation approach, which an entity may apply to certain insurance contracts as a simplification.

Para 30 An entity shall consider whether, and how, the requirements of paragraphs 29–52 are modified in paragraphs 45–52 for insurance contracts with direct participation features and in paragraphs 53–59 for the premium allocation approach. [Deleted]

Para 31 [Deleted]

Measurement on initial recognition

Para 32 On initial recognition, an entity shall measure a group of insurance contracts at the total of:
(a) the fulfilment cash flows, which comprise:
(i) estimates of future cash flows (paragraphs 33–35);
(ii) an adjustment to reflect the time value of money and the financial risks related to the future cash flows (paragraph 36); and
(iii) a risk adjustment for non-financial risk (paragraph 37).
(b) the contractual service margin, measured applying paragraphs 38–39.

MFulfilment cash flowsMEstimates of present value of future cash flo...MRisk adjustment for non-financial risk

Estimates of future cash flows

Para 33 An entity shall include in the measurement of a group of insurance contracts all the future cash flows within the boundary of each contract in the group (see paragraph 34). The estimates of future cash flows shall:
(a) incorporate, in an unbiased way, all reasonable and supportable information available without undue cost or effort about the amount, timing and uncertainty of those future cash flows. To do this, an entity shall estimate the expected value (ie the probability-weighted mean) of the full range of possible outcomes.
(b) reflect the perspective of the entity, provided that the estimates of any relevant market variables are consistent with observable market prices for those variables.
(c) be current—the estimates shall reflect conditions existing at the measurement date.
(d) be explicit—the entity shall estimate the adjustment for non-financial risk separately from the other estimates.

MFulfilment cash flowsMEstimates of present value of future cash flo...

Para 34 Cash flows are within the boundary of an insurance contract if they arise from substantive rights and obligations that exist during the reporting period in which the entity can compel the policyholder to pay the premiums or in which the entity has a substantive obligation to provide the policyholder with insurance contract services.

Para 35 An entity shall not include in the estimates of future cash flows arising from existing insurance contracts, amounts that relate to possible future insurance contracts (ie amounts outside the boundary of existing contracts).

Discount rates

Para 36 An entity shall adjust the estimates of future cash flows to reflect the time value of money and the financial risks related to those cash flows, to the extent that the financial risks are not included in the estimates of cash flows. The discount rates shall:
(a) reflect the time value of money, the characteristics of the cash flows and the liquidity characteristics of the insurance contracts;
(b) be consistent with observable current market prices for financial instruments with cash flows whose characteristics are consistent with those of the insurance contracts; and
(c) exclude the effect of factors that influence such observable market prices but do not affect the future cash flows of the insurance contracts.

TDiscount rates used for insurance contracts

Risk adjustment for non-financial risk

Para 37 An entity shall adjust the estimate of the present value of the future cash flows to reflect the compensation that the entity requires for bearing the uncertainty about the amount and timing of the cash flows that arises from non-financial risk.

MRisk adjustment for non-financial risk

Contractual service margin

Para 38 The contractual service margin is a component of the asset or liability for the group of insurance contracts that represents the unearned profit the entity will recognise as it provides insurance contract services in the future. An entity shall measure the contractual service margin on initial recognition at an amount that, unless paragraph 47 (on onerous contracts) applies, results in no income or expenses arising from: (a) the initial recognition of an amount for the fulfilment cash flows; (b) any cash flows arising from the contracts in the group at that date; (c) the derecognition at the date of initial recognition of any asset for insurance acquisition cash flows or any other previously recognised asset or liability.

MContractual service margin

Para 39 For insurance contracts acquired in a transfer of insurance contracts or in a business combination within the scope of IFRS 3, an entity shall apply paragraphs 38 and B93–B95F. For the purposes of those paragraphs, the date of acquisition is the date of initial recognition.

Subsequent measurement

Para 40 The carrying amount of a group of insurance contracts at the end of each reporting period shall be the sum of:
(a) the liability for remaining coverage comprising:
(i) the fulfilment cash flows related to future service;
(ii) the contractual service margin; and
(b) the liability for incurred claims, comprising the fulfilment cash flows related to past service.

Para 41 At each reporting date, the carrying amount of a group of insurance contracts shall be the sum of:
(a) the liability for remaining coverage—the fulfilment cash flows related to future service allocated to the group at that date, applying paragraphs B119–B119F; and
(b) the liability for incurred claims—the fulfilment cash flows related to past service allocated to the group at that date.

Para 42 At the end of each reporting period, the carrying amount of a group of insurance contracts shall not be less than the fulfilment cash flows of the group. Any increase in the fulfilment cash flows that exceeds the contractual service margin gives rise to a loss (see paragraph 48).

Para 43 At the end of each reporting period, an entity shall update the estimates of fulfilment cash flows to reflect current assumptions about the level and timing of cash flows, discount rates and financial risk, with changes in estimated cash flows relating to future service adjusting the contractual service margin (see paragraphs B96–B118).

MContractual service margin

Para 44 For insurance contracts without direct participation features, the carrying amount of the contractual service margin at the end of the reporting period equals the carrying amount at the start adjusted for: (a) new contracts added; (b) interest accreted; (c) changes in fulfilment cash flows relating to future service; (d) currency exchange differences; and (e) the amount recognised as insurance revenue because of the transfer of services in the period.

MContractual service margin

Insurance contracts with direct participation features

Para 45 An insurance contract with direct participation features is an insurance contract for which, at inception:
(a) the contractual terms specify that the policyholder participates in a share of a clearly identified pool of underlying items;
(b) the entity expects to pay to the policyholder an amount equal to a substantial share of the fair value returns on the underlying items; and
(c) the entity expects a substantial proportion of any change in the amounts to be paid to the policyholder to vary with the change in fair value of the underlying items.

Para 46 For a group of insurance contracts with direct participation features, the contractual service margin is adjusted at the end of the reporting period for the entity’s share of the change in fair value of the underlying items (see paragraph B104). Changes in fulfilment cash flows that do not vary based on the returns on underlying items relate to future service and therefore adjust the contractual service margin.

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Onerous Contracts

Para 47 An insurance contract is onerous at the date of initial recognition if the fulfilment cash flows allocated to the contract, any previously recognised insurance acquisition cash flows and any cash flows arising from the contract at the date of initial recognition in total are a net outflow. An entity shall group such contracts separately from contracts that are not onerous. An entity shall recognise a loss in profit or loss for the net outflow for the group of onerous contracts, resulting in the carrying amount of the liability being equal to the fulfilment cash flows and the contractual service margin being zero.

MLoss component of LRCMLosses on onerous contractsMLoss componentMLoss component [Member]

Para 48 If a change in fulfilment cash flows related to future service results in the total of the fulfilment cash flows exceeding the carrying amount of the contractual service margin, the excess shall be recognised as a loss in profit or loss and a loss component of the liability for remaining coverage shall be established or increased.

MLoss component of LRCMLoss component

Para 49 An entity shall establish (or increase) a loss component of the liability for remaining coverage for an onerous group depicting the losses recognised applying paragraphs 47–48. The loss component determines the amounts that are presented in profit or loss as reversals of losses on onerous groups and are consequently excluded from the determination of insurance revenue.

MLosses on onerous contractsMLoss component

Para 50 After an entity has established a loss component applying paragraph 49, the entity shall allocate on a systematic basis over the remaining coverage period:
(a) any subsequent decrease in fulfilment cash flows related to future service allocated to the group, firstly to the loss component until it is reduced to zero and then to the contractual service margin;
(b) any subsequent increase in fulfilment cash flows related to future service allocated to the group to the loss component to the extent it has been reduced below zero.

MReversals of losses on onerous contractsMLoss component

Para 51 For an onerous group, no contractual service margin shall be presented in profit or loss. However, the entity shall present in profit or loss any reversal of a previously recognised loss to the extent that the fulfilment cash flows have decreased.

MReversals of losses on onerous contracts

Para 52 The systematic allocation required by paragraph 50(a) shall result in the total amounts allocated to the loss component being equal to zero by the end of the coverage period of a group of contracts.

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Premium Allocation Approach

The PAA is the measurement model used by our IFRS 17 Engine. It is the appropriate model for general insurance in Kenya, where policy coverage periods are typically 12 months.

Para 53 An entity may simplify the measurement of a group of insurance contracts using the premium allocation approach set out in paragraphs 55–59 if, and only if, at the inception of the group:
(a) the entity reasonably expects that such simplification would produce a measurement of the liability for remaining coverage for the group that would not differ materially from the one that would be produced applying the requirements in paragraphs 32–52; or
(b) the coverage period of each contract in the group (including insurance contract services arising from all premiums within the contract boundary determined at that date applying paragraph 34) is one year or less.

TDescription of criteria satisfied when using ...

Para 55 Using the premium allocation approach, an entity shall measure the liability for remaining coverage as follows:
(a) on initial recognition, the carrying amount of the liability is:
(i) the premiums, if any, received at initial recognition;
(ii) minus any insurance acquisition cash flows at that date, unless the entity chooses to recognise the payments as an expense applying paragraph 59(a); and
(iii) plus or minus any amount arising from the derecognition at that date of any asset for insurance acquisition cash flows or any other previously recognised asset or liability.
(b) at the end of each subsequent reporting period, the carrying amount is the carrying amount at the start:
(i) plus the premiums received in the period;
(ii) minus insurance acquisition cash flows;
(iii) plus any amounts relating to the amortisation of insurance acquisition cash flows;
(iv) plus any adjustment to a financing component, applying paragraph 56;
(v) minus the amount recognised as insurance revenue for services provided in that period (see paragraph B126); and
(vi) minus any investment component paid or transferred to the liability for incurred claims.

MLiability for remaining coverage

LRC under PAA — Paragraph 55(b)

Closing LRC = Opening LRC
  + Premiums received
  − Insurance acquisition cash flows
  + Amortisation of acquisition cash flows
  ± Financing component adjustment
  − Insurance revenue (passage of time)
  − Investment components transferred to LIC

Para 56 If insurance contracts in the group have a significant financing component, an entity shall adjust the carrying amount of the liability for remaining coverage to reflect the time value of money and the effect of financial risk using the discount rates specified in paragraph 36. The entity is not required to adjust the carrying amount if, at initial recognition, the entity expects that the time between providing each part of the services and the related premium due date is no more than a year.

TDescription of adjustment for time value of m...

Para 57 If at any time during the coverage period, facts and circumstances indicate that a group of insurance contracts is onerous, an entity shall calculate the difference between: (a) the carrying amount of the liability for remaining coverage determined applying paragraph 55; and (b) the fulfilment cash flows that relate to remaining coverage of the group, applying paragraphs 33–37 and B36–B92.

TDescription of adjustment for time value of m...MLoss component of LRC

Para 58 To the extent that the fulfilment cash flows described in paragraph 57(b) exceed the carrying amount described in paragraph 57(a), the entity shall recognise a loss in profit or loss and increase the liability for remaining coverage.

Para 59 In applying the premium allocation approach, an entity:
(a) may choose to recognise any insurance acquisition cash flows as expenses when it incurs those costs, provided that the coverage period of each contract in the group at initial recognition is no more than one year.
(b) shall measure the liability for incurred claims for the group of insurance contracts at the fulfilment cash flows relating to incurred claims, applying paragraphs 33–37 and B36–B92. However, the entity is not required to adjust future cash flows for the time value of money and the effect of financial risk if those cash flows are expected to be paid or received in one year or less from the date the claims are incurred.

TDescription of method to recognise acquisitio...

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Reinsurance Contracts Held

Para 60 The requirements in IFRS 17 are modified for reinsurance contracts held, as set out in paragraphs 61–70A.

Para 61 References in IFRS 17 to insurance contracts apply to reinsurance contracts held, except: (a) for references to insurance contracts issued; and (b) as described in paragraphs 62–70A.

TDescription of reinsurance contractMReinsurance contracts held — asset

Para 62 Instead of applying paragraph 25, an entity shall recognise a group of reinsurance contracts held from the earlier of: (a) the beginning of the coverage period of the group of reinsurance contracts held; and (b) the date the entity recognises an onerous group of underlying insurance contracts applying paragraph 25(c), if the entity entered into the related reinsurance contract held at or before that date.

Para 63 Instead of applying paragraph 32, an entity shall measure a group of reinsurance contracts held on initial recognition as the sum of: (a) the fulfilment cash flows (with adjustments reflecting the holder’s perspective); and (b) any amount paid or received at that date.

MReinsurance contracts held — asset

Para 64 Instead of applying paragraph 37, an entity shall determine the risk adjustment for non-financial risk so that it represents the amount of risk being transferred by the holder of the group of reinsurance contracts to the issuer of those contracts.

Para 65 Instead of applying paragraphs 44(c) and 45(c), an entity shall adjust the contractual service margin of a group of reinsurance contracts held for changes in the fulfilment cash flows that relate to future service, to the extent that those changes result from changes in fulfilment cash flows allocated to the group of underlying insurance contracts.

Para 66 The contractual service margin of a group of reinsurance contracts held represents a net cost or net gain on purchasing reinsurance. Instead of applying paragraph 38, an entity shall measure the contractual service margin on initial recognition to result in no income or expenses arising at initial recognition unless the entity entered into a reinsurance contract to provide coverage for a group of onerous underlying contracts.

MLoss-recovery component — reinsurance

Para 66A An entity shall adjust the contractual service margin of a group of reinsurance contracts held, and as a result recognise income, when the entity recognises a loss on initial recognition of an onerous group of underlying insurance contracts or on addition of onerous underlying insurance contracts to a group.

Para 66B When an entity recognises a loss on initial recognition of a group of onerous underlying insurance contracts, or when onerous underlying insurance contracts are added to a group, the entity shall adjust the contractual service margin of the reinsurance contracts held to recognise income equal to the loss recognised on the underlying contracts, multiplied by the percentage of claims on the underlying contracts the entity expects to recover from the reinsurer.

MLoss-recovery component — reinsurance

Para 67 Changes in the fulfilment cash flows that result from changes in the risk of non-performance by the issuer of a reinsurance contract held do not relate to future service and shall not adjust the contractual service margin.

Para 68 Reinsurance contracts held cannot be onerous. Accordingly, the requirements of paragraphs 47–52 do not apply.

PAA for reinsurance contracts held

Para 69 An entity may use the premium allocation approach set out in paragraphs 55–56 and 59 (adapted to reflect the features of reinsurance contracts held that differ from insurance contracts issued) to simplify the measurement of a group of reinsurance contracts held, if at the inception of the group: (a) the entity reasonably expects the resulting measurement would not differ materially from paragraphs 63–68; or (b) the coverage period of each contract in the group is one year or less.

TDescription of criteria satisfied when using ...

Para 70 An entity applying the premium allocation approach to a group of reinsurance contracts held shall apply paragraph 57–58 to determine whether a loss on the group of reinsurance contracts held should be recognised. In applying these paragraphs, the entity shall read references to insurance contracts issued as references to reinsurance contracts held.

Para 70A When an entity applies the premium allocation approach to reinsurance contracts held and recognises a loss on underlying insurance contracts, the entity shall recognise income consistent with the requirements of paragraphs 66A–66B.

Investment contracts with discretionary participation features

Para 71 An investment contract with discretionary participation features does not include a transfer of significant insurance risk. Consequently, the requirements in IFRS 17 for insurance contracts are modified for investment contracts with discretionary participation features as follows: (a) the date of initial recognition (see paragraph 25) is the date the entity becomes party to the contract; (b) the contract boundary (see paragraph 34) is modified so that cash flows are within the contract boundary if they result from a substantive obligation of the entity to deliver cash at a present or future date; (c) the definition of the contractual service margin (see paragraphs 38, 44 and 45) is modified so it represents the obligation for the entity to pay to contract holders amounts specified by the contract.

Modification and Derecognition

Para 72 If the terms of an insurance contract are modified, for example by agreement between the parties to the contract or by a change in regulation, an entity shall derecognise the original contract and recognise the modified contract as a new contract if any of the following conditions are satisfied: (a) the modified contract would have been excluded from IFRS 17 scope, would have different separated components, or would have a substantially different contract boundary; (b) the original contract met the definition of direct participation features but the modified contract no longer does, or vice versa; or (c) the entity applied the PAA but the modifications mean the contract no longer meets PAA eligibility.

Para 73 If none of the conditions in paragraph 72 are met, the entity shall treat the contract modifications as changes in the estimates of fulfilment cash flows applying paragraphs 43–46.

Para 74 An entity shall derecognise an insurance contract when, and only when: (a) it is extinguished, ie when the obligation specified in the insurance contract expires or is discharged or cancelled; or (b) any of the conditions in paragraph 72 are met.

Para 75 When an insurance contract is extinguished, the entity is no longer at risk and is therefore no longer required to transfer any economic resources to satisfy the insurance contract. When applying the premium allocation approach, an entity shall derecognise the insurance contract when: (a) the obligation specified in the contract expires or is discharged or cancelled; or (b) the entity is released from its obligation.

Para 76 When an insurance contract is derecognised, the entity shall: (a) derecognise the liability for remaining coverage and recognise in profit or loss any difference between the carrying amount of the liability and the premiums receivable; and (b) derecognise the liability for incurred claims and recognise in profit or loss any difference.

Para 77 When an entity derecognises an insurance contract applying paragraph 72 and recognises the modified contract as a new contract, the entity shall recognise any difference between the carrying amount of the derecognised contract and the initial measurement of the modified contract in profit or loss.

Presentation in the Statement of Financial Position

Para 78 An entity shall present separately in the statement of financial position the carrying amount of portfolios of: (a) insurance contracts issued that are assets; (b) insurance contracts issued that are liabilities; (c) reinsurance contracts held that are assets; and (d) reinsurance contracts held that are liabilities.

MInsurance contracts issued that are assetsMInsurance contracts issued that are liabiliti...MReinsurance contracts held that are assetsMReinsurance contracts held that are liabiliti...

Para 79 Any assets for insurance acquisition cash flows recognised applying paragraph 28B shall be included in the carrying amount of the related portfolios of insurance contracts issued, and any assets or liabilities for cash flows related to portfolios of reinsurance contracts held (see paragraph 65(b)) shall be included in the carrying amount of the portfolios of reinsurance contracts held.

Recognition and Presentation in the Statement(s) of Financial Performance

Para 80 An entity shall disaggregate the amounts recognised in the statement(s) of financial performance into:
(a) an insurance service result (paragraphs 83–86), comprising insurance revenue and insurance service expenses; and
(b) insurance finance income or expenses (paragraphs 87–92).

MInsurance service resultMInsurance revenueMInsurance service expenses from insurance con...MInsurance finance income (expenses) from insu...

Para 81 An entity shall present income or expenses from reinsurance contracts held separately from the expenses or income from insurance contracts issued.

Para 82 [Deleted]

MIncome (expenses) from reinsurance contracts ...MFinance income (expenses) from reinsurance co...MOCI — finance income (expenses) from reinsura...

Insurance service result

Para 83 An entity shall present in profit or loss insurance revenue arising from the groups of insurance contracts issued. Insurance revenue shall depict the provision of services arising from the group of insurance contracts at an amount that reflects the consideration to which the entity expects to be entitled in exchange for those services.

MInsurance revenue

Para 84 An entity shall present in profit or loss insurance service expenses arising from a group of insurance contracts issued, comprising: (a) incurred claims (excluding repayments of investment components); (b) other incurred insurance service expenses; (c) amortisation of insurance acquisition cash flows; (d) changes that relate to past service, ie changes in fulfilment cash flows relating to the liability for incurred claims; and (e) changes that relate to future service, ie losses on groups of onerous contracts and reversals of such losses.

Para 85 Insurance revenue and insurance service expenses presented in profit or loss shall exclude any investment components. An entity shall not present premium information in profit or loss if that information is inconsistent with paragraph 83.

MInvestment components excluded from revenue a...

Para 86 Paragraphs 84–85 do not apply to an entity that applies the premium allocation approach. Such an entity shall present insurance revenue applying paragraph B126 and shall recognise insurance service expenses when they are incurred.

MIncome (expenses) from reinsurance contracts ...MIncome from amounts recovered from reinsurerMExpenses from allocation of premiums paid to ...

Insurance finance income or expenses

Para 87 Insurance finance income or expenses comprises the change in the carrying amount of the group of insurance contracts arising from:
(a) the effect of the time value of money and changes in the time value of money; and
(b) the effect of financial risk and changes in financial risk; but
(c) excluding any such changes for groups of insurance contracts with direct participation features that would adjust the contractual service margin but do not do so when applying paragraphs 45(b)(ii), 45(b)(iii), 45(c)(ii) or 45(c)(iii).

MInsurance finance income (expenses) from insu...

Para 88 An entity shall make an accounting policy choice between: (a) including insurance finance income or expenses for the period in profit or loss; or (b) disaggregating insurance finance income or expenses for the period to include in profit or loss an amount determined by a systematic allocation of the expected total insurance finance income or expenses over the duration of the group of contracts.

MInsurance finance income (expenses) from insu...

Para 89 If an entity chooses to disaggregate insurance finance income or expenses applying paragraph 88(b), the amount included in other comprehensive income (OCI) for the period equals the difference between: (a) the total insurance finance income or expenses for the period; and (b) the amount included in profit or loss applying paragraph 88(b).

MOCI — insurance finance income (expenses), wi...

Para 90 If an entity applies paragraph 88(b) for insurance contracts without direct participation features, the entity shall determine the systematic allocation by using the discount rates that applied at the date the group of contracts was initially recognised, applied to an estimate of the present value of the expected cash flows.

MOCI — insurance finance income (expenses), wi...MOCI — insurance finance income (expenses), wi...MOCI — finance income (expenses) from reinsura...

Para 91 If an entity applies paragraph 88(b) for insurance contracts with direct participation features, the systematic allocation shall be determined by allocating the difference between the insurance finance income or expenses measured using current discount rates and the changes arising from the effect of changes in the financial risks on the amounts paid to policyholders.

MReclassification adjustments on insurance fin...

Para 92 At the date a group of insurance contracts is derecognised, any amounts of the entity’s insurance finance income or expenses remaining in other comprehensive income shall be reclassified to profit or loss.

Disclosure

Para 93 The objective of the disclosure requirements is for an entity to disclose information in the notes that, together with the information provided in the statement of financial position, statement(s) of financial performance and statement of cash flows, gives a basis for users of financial statements to assess the effect that contracts within the scope of IFRS 17 have on the entity’s financial position, financial performance and cash flows. To achieve that objective, an entity shall disclose qualitative and quantitative information about:
(a) the amounts recognised in its financial statements for contracts within the scope of IFRS 17 (see paragraphs 97–116);
(b) the significant judgements, and changes in those judgements, made when applying IFRS 17 (see paragraphs 117–120); and
(c) the nature and extent of the risks from contracts within the scope of IFRS 17 (see paragraphs 121–132).

Para 94 An entity shall consider the level of detail necessary to satisfy the disclosure requirements and how much emphasis to place on each of the various requirements. If the disclosures provided, applying paragraphs 97–132, are not enough to meet the objective in paragraph 93, an entity shall disclose additional information necessary.

Para 95 An entity shall aggregate or disaggregate information so that useful information is not obscured either by the inclusion of a large amount of insignificant detail or by the aggregation of items that have different characteristics.

Para 96 Paragraphs 97–132 specify requirements on information an entity would normally need to provide to meet the objectives stated. But if information provided under other standards meets these requirements, an entity need not duplicate it.

Explanation of recognised amounts (Paragraphs 97–116)

Para 97 Of the disclosures required by paragraphs 98–109A, only those in paragraphs 98–100, 102–103, 105–105B and 109A apply to contracts to which the premium allocation approach has been applied. The entity applying the PAA shall also disclose: (a) which of the criteria in paragraphs 53 and 69 it has satisfied; (b) whether it makes an adjustment for the time value of money and the effect of financial risk applying paragraphs 56, 57(b) and 59(b); and (c) the method it has chosen to recognise insurance acquisition cash flows applying paragraph 59(a).

TDescription of criteria satisfied when using ...TDescription of adjustment for time value of m...TDescription of method to recognise acquisitio...

Para 98 An entity shall disclose reconciliations that show how the net carrying amounts of contracts within the scope of IFRS 17 changed during the period because of cash flows and amounts that are recognised in the statement(s) of financial performance.

TBDisclosure of reconciliation by remaining cov...ADisaggregation of insurance contracts [Axis]MInsurance contracts issued [Member]MReinsurance contracts held [Member]

Para 99 Separate reconciliations shall be disclosed for insurance contracts issued and reinsurance contracts held. The requirements of paragraphs 100–109 are adapted to reinsurance contracts held to reflect that they are typically assets rather than liabilities.

MInsurance contracts liability (asset)MInsurance contracts that are assetsMInsurance contracts that are liabilities

Para 100 An entity shall disclose reconciliations from the opening to the closing balances separately for each of:
(a) the net liabilities (or assets) for the remaining coverage component, excluding any loss component.
(b) any loss component (see paragraphs 47–52 and 57–58).
(c) the liabilities for incurred claims. For insurance contracts to which the PAA has been applied, an entity shall disclose separate reconciliations for: (i) the estimates of the present value of the future cash flows; and (ii) the risk adjustment for non-financial risk.

MEstimates of present value of future cash flo...MRisk adjustment for non-financial riskMLiability for remaining coverageMLiability for incurred claims

Para 101 For insurance contracts other than those to which the premium allocation approach has been applied, an entity shall also disclose reconciliations from the opening to the closing balances separately for each of: (a) the estimates of the present value of the future cash flows; (b) the risk adjustment for non-financial risk; and (c) the contractual service margin.

MEstimates of present value of future cash flo...MRisk adjustment for non-financial riskMContractual service marginTBDisclosure of reconciliation by components

Para 102 The objective of the reconciliations in paragraphs 100–101 is to provide different types of information about the insurance service result.

Para 103 An entity shall separately disclose in the reconciliations each of the following amounts related to services: (a) insurance revenue; (b) insurance service expenses, showing separately: (i) incurred claims and other incurred insurance service expenses; (ii) amortisation of insurance acquisition cash flows; (iii) changes that relate to past service; and (iv) changes that relate to future service, ie losses on onerous groups and reversals.

MIncrease (decrease) through insurance service...MIncrease (decrease) through insurance revenueMIncrease (decrease) through insurance service...MIncrease (decrease) through incurred claims

Para 104 To the extent necessary to supplement the disclosures in paragraph 103, an entity shall also disclose amounts transferred between the liability for remaining coverage and the liability for incurred claims, showing separately: (a) the incurred claims and expenses in the period; (b) changes relating to past service; and (c) changes relating to future service.

MIncrease (decrease) through insurance service...MIncrease (decrease) through changes — past se...MIncrease (decrease) through changes — future ...MIncrease (decrease) through changes — current...

Para 105 An entity shall also disclose separately each of the following amounts not related to services: (a) cash flows in the period, including: (i) premiums received; (ii) insurance acquisition cash flows; and (iii) incurred claims paid and other insurance service expenses paid. (b) the effect of changes in the risk of non-performance by the issuer of reinsurance contracts held; (c) insurance finance income or expenses.

MIncrease (decrease) through cash flowsMIncrease (decrease) through premiums receivedMIncrease (decrease) through acquisition cash ...MIncrease (decrease) through claims paid

Para 105A An entity shall separately disclose in the reconciliation of assets for insurance acquisition cash flows the following: (a) the amount of assets recognised at the beginning of the period; (b) the amounts paid during the period; (c) the amounts derecognised and included in the measurement of the group of insurance contracts; (d) impairment losses and reversals; and (e) the amount of assets recognised at the end of the period.

Para 106 For insurance contracts other than those to which the premium allocation approach has been applied, an entity shall disclose an analysis of the insurance revenue recognised in the period comprising: (a) the amounts relating to the changes in the liability for remaining coverage as specified in paragraph B124.

MInsurance revenueTBDisclosure of analysis of insurance revenueMInsurance revenue — changes in liability for ...MInsurance revenue — service expenses incurred...

Para 107 For insurance contracts other than those to which the PAA has been applied, an entity shall disclose the effect on the statement of financial position separately for insurance contracts issued and reinsurance contracts held that are initially recognised in the period, showing: (a) the effect of the initial recognition on the fulfilment cash flows; and (b) the effect of derecognition in the period of contracts.

TBDisclosure of effect of contracts initially r...ADisaggregation of insurance contracts [Axis]MInsurance contracts issued [Member]MReinsurance contracts held [Member]

Para 109 An entity shall disclose when it expects to recognise the contractual service margin remaining at the end of the reporting period in profit or loss, either quantitatively or qualitatively.

MContractual service marginTBDisclosure of expected recognition of CSM in ...TExplanation of when entity expects to recogni...ADisaggregation of insurance contracts [Axis]

Para 109A An entity shall disclose quantitatively, in appropriate time bands, when it expects to derecognise an asset for insurance acquisition cash flows by applying paragraph 28C.

Insurance finance income or expenses disclosure (Paragraphs 110–113)

Para 110 An entity shall disclose and explain the total amount of insurance finance income or expenses in the reporting period. In particular, an entity shall explain the relationship between insurance finance income or expenses and the investment return on its assets, to enable users of its financial statements to evaluate the sources of finance income or expenses.

MInsurance finance income (expenses)TExplanation of insurance finance income (expe...TExplanation of relationship between insurance...

Para 111 For contracts with direct participation features, the entity shall describe the composition of the underlying items and disclose their fair value.

TDescription of composition of underlying item...MFair value of underlying items — DPF

Para 112 For contracts with direct participation features, if an entity chooses not to adjust the contractual service margin for some changes in the fulfilment cash flows applying paragraph 45(c), it shall disclose the effect of that choice on the adjustment to the contractual service margin in the current period.

MEffect on CSM of choice not to adjust — DPF

Para 113 For contracts with direct participation features, if an entity changes the basis used to disaggregate insurance finance income or expenses between profit or loss and OCI, it shall disclose in the period in which the change in approach occurred: (a) the reason the entity was required to change the basis; (b) the amount of any adjustment for each financial statement line item affected; and (c) the carrying amount of the group of insurance contracts to which the change applied, at the date of the change.

TReason for change in basis of disaggregation ...

Para 114 Transition amounts. An entity shall provide disclosures that enable users of financial statements to identify the effect of groups of insurance contracts measured at the transition date applying the modified retrospective approach (see paragraphs C6–C19A) or the fair value approach (see paragraphs C20–C24B) on the contractual service margin and insurance revenue in subsequent periods.

TBDisclosure of transition amountsMCSM — modified retrospective approachMCSM — fair value approachMCSM — all other contracts

Para 115 To enable the disclosures in paragraph 114, an entity shall disclose the reconciliation from the opening to the closing balance of the contractual service margin applying paragraph 101(c) separately for: (a) insurance contracts that existed at the transition date to which the entity applied the modified retrospective approach; (b) the fair value approach; and (c) all other insurance contracts.

Para 116 For all periods in which disclosures are provided applying paragraphs 114–115, to enable users to understand the nature and significance of the methods used and judgements applied in determining transition amounts, an entity shall explain how it determined the measurement of insurance contracts at the transition date.

Significant judgements (Paragraphs 117–120)

Para 117 An entity shall disclose the significant judgements and changes in judgements made in applying IFRS 17. Specifically, an entity shall disclose the inputs, assumptions and estimation techniques used, including: (a) the methods used to measure insurance contracts and the processes for estimating the inputs; (b) any changes in the methods and processes; (c) the approach used to determine the risk adjustment, discount rates, and investment components.

TDescription of significant judgements applyin...TDescription of inputs, methods and processes ...TDescription of approach to determine risk adj...TBDisclosure of inputs to methods used to measu...

Para 118 If an entity has chosen to disaggregate insurance finance income or expenses between profit or loss and other comprehensive income applying paragraph 88(b) or 89(b), the entity shall disclose the methods used to determine the insurance finance income or expenses recognised in profit or loss.

TDescription of inputs, methods and processes ...

Para 119 An entity shall disclose the confidence level used to determine the risk adjustment for non-financial risk. If the entity uses a technique other than the confidence level technique, it shall disclose the technique used and the confidence level corresponding to the results.

TDescription of approach to determine risk adj...PERConfidence level used to determine risk adjus...

Para 120 An entity shall disclose the yield curve (or range of yield curves) used to discount cash flows that do not vary based on the returns on underlying items.

TDiscount rates used for insurance contractsTDescription of yield curve usedTBDisclosure of yield curve

Nature and extent of risks (Paragraphs 121–132)

Para 121 An entity shall disclose information that enables users of its financial statements to evaluate the nature, amount, timing and uncertainty of future cash flows that arise from contracts within the scope of IFRS 17.

TBDisclosure of nature and extent of risksTDescription of objectives and policies for ma...

Para 122 Disclosures of information about insurance risk and credit risk — An entity shall disclose: (a) information about insurance risk, including claims frequency, severity, and development; (b) information about credit risk, including concentrations of credit risk.

Para 124 An entity shall disclose information about its exposure to risk, the methods used to measure that risk, and any changes from the previous period.

TBDisclosure of nature and extent of risksTDescription of objectives and policies for ma...TDescription of terms and conditions of insura...TDescription of methods used to measure insura...

Para 125 If the quantitative data disclosed at the end of the reporting period is unrepresentative of the entity’s exposure to risk during the period, the entity shall provide further information that is representative.

TSummary of insurance activity during periodATypes of risks [Axis]MInsurance risk [Member]MFinancial risk [Member]

Para 126 For each type of risk arising from contracts within the scope of IFRS 17, an entity shall disclose: (a) a summary of its exposures and how they arise; (b) its objectives, policies and processes for managing those risks and the methods used to measure them; and (c) any changes in (a) or (b) from the previous period.

Para 127 An entity shall disclose information about concentrations of risk arising from contracts within the scope of IFRS 17, including a description of how the entity determines the concentrations, and a description of the shared characteristic that identifies each concentration.

TBConcentrations of insurance riskATypes of risks [Axis]MInsurance risk [Member]MFinancial risk [Member]

Para 128 An entity shall disclose information about sensitivities to changes in risk variables, including: (a) a sensitivity analysis showing how profit or loss and equity would have been affected by changes in risk variables that were reasonably possible at the end of the reporting period; (b) the methods and assumptions used; and (c) changes from the previous period.

TBSensitivity analysis — insurance riskMEffect on P&L and equity of reasonably possib...TDescription of methods and assumptions — sens...TDescription of changes from prior period — se...

Para 129 If an entity prepares a sensitivity analysis that shows the effects of changes in more than one risk variable, and this analysis differs from that required by paragraph 128, it may use that analysis in place of the analysis required by paragraph 128. The entity shall also disclose the method used in preparing the alternative sensitivity analysis and the reasons it considers it more representative.

Para 130 An entity shall disclose actual claims compared with previous estimates of the undiscounted amount of the claims (ie claims development). The disclosure shall start with the period when the earliest material claim(s) arose but is not required to start more than 10 years before the end of the reporting period.

TBDisclosure of claims developmentMClaims development

Para 131 An entity is not required to provide the claims development information disclosed before the beginning of the earliest period presented in the financial statements in which the entity first applies IFRS 17.

TBDisclosure of claims developmentMClaims developmentTBDisclosure of credit risk from reinsurance co...MMaximum exposure to credit risk — reinsurance

Para 132 For liquidity risk, an entity shall disclose: (a) a description of how it manages the liquidity risk; (b) separate maturity analyses for portfolios of insurance contracts issued that are liabilities and portfolios of reinsurance contracts held that are liabilities showing net cash flows for each of the first five years and in aggregate beyond; and (c) the amounts payable on demand.

TBDisclosure of liquidity risk from insurance c...MMaturity analysis — insurance contractsADisaggregation of insurance contracts [Axis]

Appendix A — Defined Terms

This appendix is an integral part of IFRS 17 Insurance Contracts. Terms defined here are in italics the first time they appear in the Standard.

Contractual service margin

A component of the carrying amount of the asset or liability for a group of insurance contracts representing the unearned profit the entity will recognise as it provides insurance contract services under the insurance contracts in the group.

Coverage period

The period during which the entity provides insurance contract services. This period includes the insurance contract services that relate to all premiums within the boundary of the insurance contract.

Experience adjustment

A difference between: (a) for premium receipts—the estimate at the beginning of the period of the amounts expected in the period and the actual cash flows in the period; or (b) for insurance service expenses—the estimate at the beginning of the period of the amounts expected to be incurred in the period and the actual amounts incurred.

Financial risk

The risk of a possible future change in one or more of a specified interest rate, financial instrument price, commodity price, currency exchange rate, index of prices or rates, credit rating or credit index or other variable, provided in the case of a non-financial variable that the variable is not specific to a party to the contract.

Fulfilment cash flows

An explicit, unbiased and probability-weighted estimate (ie expected value) of the present value of the future cash outflows minus the present value of the future cash inflows that will arise as the entity fulfils insurance contracts, including a risk adjustment for non-financial risk.

Group of insurance contracts

A set of insurance contracts resulting from the division of a portfolio of insurance contracts into, at a minimum, contracts issued within a period of no longer than one year and that, at initial recognition: (a) are onerous, if any; (b) have no significant possibility of becoming onerous subsequently, if any; or (c) do not fall into either (a) or (b), if any.

Insurance acquisition cash flows

Cash flows arising from the costs of selling, underwriting and starting a group of insurance contracts (issued or expected to be issued) that are directly attributable to the portfolio of insurance contracts to which the group belongs.

Insurance contract

A contract under which one party (the issuer) accepts significant insurance risk from another party (the policyholder) by agreeing to compensate the policyholder if a specified uncertain future event (the insured event) adversely affects the policyholder.

Insurance contract services

The following services that an entity provides to a policyholder: (a) coverage for an insured event (insurance coverage); (b) for contracts without direct participation features, the generation of an investment return for the policyholder (investment-return service); and (c) for contracts with direct participation features, the management of underlying items on behalf of the policyholder (investment-related service).

Insurance contract with direct participation features

An insurance contract for which, at inception: (a) the contractual terms specify that the policyholder participates in a share of a clearly identified pool of underlying items; (b) the entity expects to pay to the policyholder an amount equal to a substantial share of the fair value returns on the underlying items; and (c) the entity expects a substantial proportion of any change in the amounts to be paid to the policyholder to vary with the change in fair value of the underlying items.

Insurance contract without direct participation features

An insurance contract that is not an insurance contract with direct participation features.

Insurance risk

Risk, other than financial risk, transferred from the holder of a contract to the issuer.

Insured event

An uncertain future event covered by an insurance contract that creates insurance risk.

Investment component

The amounts that an insurance contract requires the entity to repay to a policyholder in all circumstances, regardless of whether an insured event occurs.

Investment contract with discretionary participation features

A financial instrument that provides a particular investor with the contractual right to receive, as a supplement to an amount not subject to the discretion of the issuer, additional amounts that: (a) are expected to be a significant portion of the total contractual benefits; (b) the timing or amount of which are contractually at the discretion of the issuer; and (c) are contractually based on returns on a specified pool of contracts, assets, or the profit or loss of the issuer.

Liability for incurred claims

An entity’s obligation to: (a) investigate and pay valid claims for insured events that have already occurred, including events that have occurred but for which claims have not been reported, and other incurred insurance expenses; and (b) pay amounts that are not included in (a) and that relate to insurance contract services that have already been provided or any investment components not in the liability for remaining coverage.

Liability for remaining coverage

An entity’s obligation to: (a) investigate and pay valid claims under existing insurance contracts for insured events that have not yet occurred (ie the unexpired portion of insurance coverage); and (b) pay amounts under existing insurance contracts that relate to insurance contract services not yet provided or any investment components not transferred to the liability for incurred claims.

Policyholder

A party that has a right to compensation under an insurance contract if an insured event occurs.

Portfolio of insurance contracts

Insurance contracts subject to similar risks and managed together.

Reinsurance contract

An insurance contract issued by one entity (the reinsurer) to compensate another entity for claims arising from one or more insurance contracts issued by that other entity (underlying contracts).

Risk adjustment for non-financial risk

The compensation an entity requires for bearing the uncertainty about the amount and timing of the cash flows that arises from non-financial risk as the entity fulfils insurance contracts.

Underlying items

Items that determine some of the amounts payable to a policyholder. Underlying items can comprise any items; for example, a reference portfolio of assets, the net assets of the entity, or a specified subset of the net assets of the entity.

Appendix B — Application Guidance

This appendix is an integral part of IFRS 17 Insurance Contracts. It provides guidance on: (a) definition of an insurance contract (B2–B30); (b) separation of components (B31–B35); (ba) asset for insurance acquisition cash flows (B35A–B35D); (c) measurement (B36–B119F); (d) insurance revenue (B120–B127); (e) insurance finance income or expenses (B128–B136); and (f) interim financial statements (B137).

Definition of an insurance contract (B2–B30)

Para B2 This section provides guidance on the definition of an insurance contract in Appendix A. It addresses: (a) uncertain future event (see paragraphs B3–B5); (b) payments in kind (see paragraph B6); (c) the distinction between insurance risk and other risks (see paragraphs B7–B16); (d) significant insurance risk (see paragraphs B17–B23); (e) changes in the level of insurance risk (see paragraphs B24–B25); and (f) examples of insurance contracts (see paragraphs B26–B30).

TDescription of insurance contractTDefinition of insurance contract — guidance

Para B3 Uncertainty (or risk) is the essence of an insurance contract. Accordingly, at least one of the following is uncertain at the inception of an insurance contract: (a) the probability of an insured event occurring; (b) when the insured event will occur; or (c) how much the entity will need to pay if the insured event occurs.

TDefinition of insurance contract — guidance

Para B4 In some insurance contracts, the insured event is the discovery of a loss during the term of the contract, even if the loss arises from an event that occurred before the inception of the contract. In other insurance contracts, the insured event is an event that occurs during the term of the contract, even if the resulting loss is discovered after the end of the contract term.

Para B5 Some insurance contracts cover events that have already occurred but whose financial effect is still uncertain. An example is an insurance contract that provides coverage against an adverse development of an event that has already occurred. In such contracts, the insured event is the determination of the ultimate cost of those claims.

Para B6 Some insurance contracts require or permit payments to be made in kind. For example, when the entity directly replaces a stolen article instead of reimbursing the policyholder. In such cases, the insured event is the triggering of the obligation to provide goods or services.

Para B7 The definition of an insurance contract requires that one party accepts significant insurance risk from another party. IFRS 17 defines insurance risk as ‘risk, other than financial risk, transferred from the holder of a contract to the issuer’. A contract that exposes the issuer to financial risk without significant insurance risk is not an insurance contract.

Para B8 The definition of financial risk in Appendix A includes a list of financial and non-financial variables. That list includes non-financial variables that are not specific to a party to the contract, such as an index of earthquake losses in a particular region or temperatures in a particular city. It excludes non-financial variables specific to a party to the contract, such as the occurrence or non-occurrence of a fire that damages an asset of that party. Furthermore, the risk of changes in the fair value of a non-financial asset is not a financial risk if the fair value reflects changes in the market prices for such assets (ie a financial variable) and also the condition of a specific non-financial asset held by a party (ie a non-financial variable).

Para B10 The following are examples of contracts that are insurance contracts, if the transfer of insurance risk is significant: (a) theft or damage insurance; (b) product liability, professional liability, civil liability or legal expenses insurance; (c) life insurance and prepaid funeral plans; (d) disability and medical cost insurance; (e) surety bonds, fidelity bonds, performance bonds and bid bonds; (f) credit insurance (providing for specified payments when the holder incurs a loss because a specified debtor fails to make a payment when due); (g) product warranties.

Para B12 The following are examples of items that are not insurance contracts: (a) investment contracts that have the legal form of an insurance contract but do not transfer significant insurance risk (such contracts are non-insurance financial instruments); (b) self-insurance; (c) gambling contracts; (d) derivatives that expose one party to financial risk but not insurance risk.

Significant insurance risk (B17–B23)

Para B17 A contract transfers significant insurance risk only if an insured event could cause the issuer to pay significant additional amounts in any scenario, excluding scenarios that lack commercial substance (ie have no discernible effect on the economics of the transaction).

TSignificant insurance risk

Para B18 Insurance risk is significant if, and only if, an insured event could cause the issuer to pay additional amounts that are significant in any single scenario, excluding scenarios that have no commercial substance. If an insured event could mean significant additional amounts would be payable in any scenario that has commercial substance, the condition can be met even if the insured event is extremely unlikely.

TSignificant insurance risk

Para B19 The additional amounts described in paragraph B18 are determined on a present value basis. If an insurance contract requires payment when an event with uncertain timing occurs and if the payment is not adjusted for the time value of money, there may be scenarios in which the present value of the payment increases, even if its nominal value is fixed.

TSignificant insurance risk

Para B20 A condition that relates to insured events applies only to existing policyholders. A rider that permits an entity to increase premiums on existing contracts based on loss experience of all policyholders does not create insurance risk from existing contracts, because the entity can decline the premium increase.

Para B22 A contract that is not an insurance contract at inception can become one later, and vice versa. An entity must assess at each reporting date whether the contract transfers significant insurance risk.

Examples of insurance contracts (B26–B30)

Para B26 The following are examples of contracts that are insurance contracts if they transfer significant insurance risk: (a) insurance against theft or damage; (b) insurance against product liability, professional liability, civil liability; (c) life insurance and prepaid funeral plans (although death is certain, there is uncertainty about when it will occur); (d) life-contingent annuities and pensions; (e) disability and medical cost insurance.

Para B28 A contract that meets the definition of an insurance contract remains an insurance contract until all rights and obligations are extinguished (ie discharged, cancelled, or expired), unless the contract is derecognised applying paragraphs 74–77.

Separating components (B31–B35)

Para B31 An investment component is distinct if, and only if, both the following conditions are met: (a) the investment component and the insurance component are not highly interrelated; and (b) a contract with equivalent terms is sold, or could be sold, separately in the same market or jurisdiction.

TDescription of investment component separatio...

Para B32 An investment component and an insurance component are highly interrelated if: (a) the entity is unable to measure one component without considering the other—ie if the value of one component varies according to the value of the other, the entity shall apply IFRS 17 to account for the combined investment and insurance component; or (b) the policyholder is unable to benefit from one component unless the other is also present.

Para B33 After separating any cash flows that are not directly related to the insurance component, the entity shall fulfil the promise to the policyholder holding the insurance contract to return the investment component regardless of whether an insured event occurs. This obligation gives rise to a liability, unless the cash flows are included in the fulfilment cash flows.

Para B34 If a component of an insurance contract would, if it were a separate contract, be within the scope of another Standard (other than IFRS 9 for embedded derivatives or for separated investment components), the entity shall: (a) apply the other Standard to that component; and (b) apply IFRS 17 to the remainder of the contract.

Para B35 After separating the components applying paragraph B34, the entity shall apply IFRS 17 to the residual contract. All references in IFRS 17 to investment components refer to those that have not been separated.

Insurance acquisition cash flows (B35A–B35D)

Para B35A To apply paragraph 28A, an entity shall use a systematic and rational method to allocate: (a) insurance acquisition cash flows directly attributable to a group of insurance contracts to that group and to groups that will include contracts expected to arise from renewals; (b) insurance acquisition cash flows directly attributable to a portfolio but not to a specific group, to groups of contracts in the portfolio.

MInsurance acquisition cash flows

Para B35B At the end of each reporting period, an entity shall revise the amounts allocated to groups of insurance contracts to reflect any changes in assumptions that determine the inputs to the method of allocation used. An entity shall not change the amounts allocated to a group of insurance contracts after all contracts have been added to the group (see paragraph 28).

MInsurance acquisition cash flows

Para B35C An entity might incur insurance acquisition cash flows before it recognises the related group of insurance contracts. In those circumstances, the entity shall recognise an asset for those cash flows applying paragraph 28B.

Para B35D An entity shall assess the recoverability of an asset for insurance acquisition cash flows if facts and circumstances indicate the asset may be impaired. An impairment loss exists if the carrying amount of the asset exceeds the expected net cash inflows for the related group. The impairment loss shall be recognised in profit or loss. The entity shall review the assessment of recoverability at the end of each reporting period.

Measurement — Estimates of future cash flows (B36–B71)

Para B36 This section addresses the following aspects of estimates of future cash flows: (a) unbiased use of all reasonable and supportable information (see paragraphs B37–B41); (b) market variables and non-market variables (see paragraphs B42–B53); (c) using current estimates (see paragraphs B54–B60); and (d) cash flows within the contract boundary (see paragraphs B61–B71).

MFulfilment cash flows

Para B37 The objective of estimating future cash flows is to determine the expected value, or probability-weighted mean, of the full range of possible outcomes, considering all reasonable and supportable information available at the reporting date without undue cost or effort.

Para B38 The estimate of the expected value does not, in itself, need to be within the full range of possible outcomes. An entity shall use judgement in developing the estimate but is not required to use elaborate techniques. The technique used depends on the nature of the cash flows being estimated.

Para B39 The techniques used to develop estimates shall be consistent with the objective. If using a small number of scenarios, there shall be sufficient scenarios to satisfy the objective. Similarly, if using a point estimate, it shall represent the expected value (ie the probability-weighted mean).

Para B40 An entity shall consider the full range of possible outcomes. The objective is to determine the expected value of the full range of possible outcomes in an unbiased way, rather than to identify the most likely outcome or a more-likely-than-not outcome.

Para B41 An entity is not required to identify every possible scenario. However, the entity shall not ignore information about possible scenarios that is available without undue cost or effort, and shall include sufficient scenarios to achieve an unbiased estimate.

Market variables and non-market variables (B42–B53)

Para B42 IFRS 17 identifies two types of variables: (a) market variables—variables that can be observed in, or derived directly from, markets (for example, prices of publicly traded securities and interest rates); and (b) non-market variables—all other variables (for example, the frequency and severity of insurance claims and mortality).

Para B44 Estimates of market variables shall be consistent with observable market prices at the measurement date. An entity shall maximise the use of observable inputs and shall not substitute its own estimates for observable market data.

Para B50 Estimates of non-market variables shall reflect all reasonable and supportable evidence available without undue cost or effort, both external and internal.

Using current estimates (B54–B60)

Para B54 Estimates of future cash flows shall reflect conditions at the measurement date. An entity shall estimate the amount, timing and uncertainty of future cash flows to the extent possible without undue cost or effort, using information available at the measurement date.

Para B55 In estimating each cash flow scenario, the entity shall use the most current unbiased estimate, rather than merely extrapolating past experience. Past experience is often a helpful starting point. However, an entity shall adjust past experience to reflect current conditions.

Cash flows within the contract boundary (B61–B71)

Para B61 Estimates of future cash flows shall include all cash flows within the boundary of an existing contract and no other cash flows. An entity shall determine the contract boundary by applying paragraph 34.

Para B63 Some insurance contracts have features that effectively allow the policyholder to establish a new insurance contract at a date that the entity would otherwise not offer the policyholder the same terms. Cash flows related to the guaranteed renewal are within the boundary of the existing contract if they arise from a substantive obligation of the entity.

Para B65 Cash flows within the boundary of an insurance contract are those that relate directly to the fulfilment of the contract, including: (a) premiums (including premium adjustments and instalment premiums) from a policyholder and any additional cash flows that result from those premiums; (b) payments to (or on behalf of) a policyholder, including claims, benefits, and settlement costs; (c) payments that vary depending on returns on underlying items; (d) insurance acquisition cash flows; (e) claim handling costs; (f) policy administration and maintenance costs; (g) transaction-based taxes and levies; and (h) cash flows from options and guarantees embedded in insurance contracts.

Para B66 Cash flows within the boundary of an insurance contract shall not include: (a) investment returns; (b) cash flows (payments or receipts) that arise from reinsurance contracts held; (c) cash flows that may arise from future insurance contracts; and (d) cash flows relating to costs that cannot be directly attributed to the portfolio of contracts that contains the contract.

Discount rates (B72–B85)

Para B72 An entity shall use the following discount rates:
(a) to measure fulfilment cash flows—current discount rates applying paragraph 36;
(b) to determine the interest to accrete on the contractual service margin for contracts without direct participation features—discount rates determined at the date of initial recognition applying paragraph 36, adjusted for new contracts added to the group applying paragraph 28;
(c) to measure the changes in the contractual service margin applying paragraphs 44(c)–(d) for contracts without direct participation features—discount rates at initial recognition;
(d) for entities that disaggregate insurance finance income or expenses between profit or loss and OCI applying paragraph 88(b)—discount rates determined at the date of initial recognition; and
(e) for entities that apply the PAA for LIC—current discount rates at the date the claim was incurred.

TDiscount rates used for insurance contractsTDescription of yield curve usedTDiscount rates — determination guidance

Para B74 Discount rates shall reflect the characteristics of the cash flows arising from the insurance contracts. Factors that shall be reflected include the timing, currency and liquidity of the cash flows. Those discount rates may not be directly observable in the market. Therefore, an entity may need to use estimation techniques.

Para B78 In determining discount rates, an entity may use either: (a) a bottom-up approach—starting with a liquid risk-free yield curve and adding an illiquidity premium for the characteristics of the insurance contract liabilities; or (b) a top-down approach—starting with the yield curve that reflects the current market rates of return of a reference portfolio of assets and deducting any factors not relevant to the insurance contracts.

TDiscount rates — determination guidance

Para B79 The bottom-up approach starts with the yield on a liquid risk-free instrument (typically government bonds) and adds a spread to compensate for the difference in liquidity between the insurance contracts and the risk-free instruments.

Para B80 The top-down approach starts with the yield on a portfolio of assets and deducts factors that are not relevant to the insurance contracts, including the credit risk of the assets in the portfolio. There is no requirement for the reference portfolio to be one held by the entity.

TDiscount rates — determination guidance

Para B81 The two approaches need not produce the same result, but an entity need not reconcile them. However, there should not be a significant difference between the two approaches.

Para B84 For cash flows that vary based on the returns on financial underlying items, the discount rate shall reflect that dependency to the extent the cash flows and discount rates both reflect the same underlying items in a consistent manner.

Para B85 Paragraph 36 requires discount rates to exclude the effect of factors that influence observable market prices for financial instruments but do not affect the future cash flows. An entity is not required to adjust these for factors that are irrelevant to the insurance contract cash flows.

Risk adjustment for non-financial risk (B86–B92)

Para B86 The risk adjustment for non-financial risk relates to risk arising from insurance contracts other than financial risk. Financial risk is included in the estimates of the future cash flows or the discount rate used to adjust the cash flows, or both.

MRisk adjustment for non-financial riskTRisk adjustment — techniques

Para B90 The risk adjustment for non-financial risk shall: (a) reflect the compensation the entity would require for bearing the non-financial risk; (b) reflect the entity’s degree of risk aversion; and (c) have the characteristic that an increase in the level of non-financial risk will lead to an increase in the risk adjustment.

Para B91 IFRS 17 does not specify the estimation technique(s) used to determine the risk adjustment. However, to reflect the compensation the entity would require, the risk adjustment shall have the characteristics described in paragraph B90.

TRisk adjustment — techniques

Para B92 The following techniques may be used to estimate the risk adjustment: (a) confidence level techniques (eg 75th percentile); (b) conditional tail expectation (CTE/TVaR); and (c) cost of capital methods. IFRS 17 does not prescribe which method to use but requires disclosure of the confidence level corresponding to the result (see paragraph 119).

TRisk adjustment — techniques

Contractual service margin (B96–B119F)

Para B96 Changes in fulfilment cash flows that relate to future service adjust the contractual service margin. These include: (a) experience adjustments arising from premiums received in the period and related cash flows; (b) changes in estimates of the present value of future cash flows in the liability for remaining coverage; and (c) changes in the risk adjustment for non-financial risk relating to future service.

TCSM recognition pattern

Para B97 Changes in fulfilment cash flows resulting from changes in the following relate to future service and adjust the contractual service margin: (a) estimates of future cash flows relating to future service; (b) the risk adjustment for non-financial risk relating to future service; and (c) the time value of money and the effect of financial risk that are not changes arising from the effect of the time value of money, the effect of financial risk, and changes therein on the estimated amounts of the future cash flows.

Para B98 An entity shall not adjust the contractual service margin for changes in fulfilment cash flows relating to: (a) the effect of the time value of money and changes therein on the estimated amounts of future cash flows (interest accretion on the contractual service margin is accounted for separately); or (b) changes in fulfilment cash flows relating to the liability for incurred claims (as these relate to past service).

Para B100 For insurance contracts without direct participation features, the adjustments to the contractual service margin for changes in fulfilment cash flows relating to future service are measured at the discount rates determined at initial recognition (locked-in rates).

Para B104 For insurance contracts with direct participation features, the contractual service margin is adjusted for: (a) the entity’s share of the change in fair value of the underlying items (recognised in the CSM rather than in profit or loss); and (b) changes in fulfilment cash flows that do not vary based on the returns on underlying items (also relating to future service).

Coverage units (B119–B119F)

Para B119 The amount of the contractual service margin for a group of insurance contracts recognised in profit or loss in each period is determined by identifying the coverage units in the group, and allocating the contractual service margin remaining at the end of the period equally to each coverage unit provided in the current period and expected to be provided in the future.

TCSM recognition pattern

Para B119A The number of coverage units in a group is the quantity of insurance contract services provided by the contracts in the group, determined by considering for each contract the quantity of the benefits provided under a contract and its expected coverage period.

Para B119B At the end of each reporting period, the amount of the contractual service margin recognised in profit or loss is: CSM at end of period ÷ (coverage units provided in period + coverage units expected in future) × coverage units provided in period.

Para B119C If a contract provides insurance coverage and an investment-return service or an investment-related service, and the entity expects that the services will be provided over periods of different duration, the entity shall determine the quantity of coverage units provided by each type of service.

Insurance revenue (B120–B127)

Para B120 The total insurance revenue for a group of insurance contracts equals the total of the consideration the entity expects to receive for the contracts. This differs from GWP because: (a) it is recognised as insurance services are provided rather than on receipt; (b) it excludes any investment component; and (c) it is adjusted for the financing component if applicable.

TInsurance revenue recognition guidance

Para B121 Insurance revenue excludes any investment components. Paragraphs B120–B127 apply to insurance contracts other than reinsurance contracts held. The amounts arising from reinsurance contracts held are presented applying paragraph 81.

MInsurance revenueTInsurance revenue recognition guidance

Para B123 Insurance revenue for the period depicts the transfer of insurance contract services at an amount reflecting the consideration to which the entity expects to be entitled. The entity shall determine insurance revenue by allocating the changes in the liability for remaining coverage in the period between: (a) insurance service expenses; (b) insurance revenue; and (c) amounts not relating to services.

TInsurance revenue recognition guidance

Para B124 Insurance revenue for the period for a group of contracts not applying the PAA equals the changes in the liability for remaining coverage relating to services provided, comprising: (a) insurance service expenses incurred (excluding loss component allocations and investment component repayments); (b) the change in the risk adjustment for non-financial risk; (c) the amount of the contractual service margin recognised in profit or loss; and (d) other amounts including experience adjustments for premium receipts other than those relating to future service.

MInsurance revenue — service expenses incurred...MInsurance revenue — change in risk adjustmentMInsurance revenue — CSM recognised

Para B126 When an entity applies the premium allocation approach in paragraphs 55–58, insurance revenue for the period is the amount of expected premium receipts (excluding any investment component and adjusted to reflect the time value of money and the effect of financial risk, if applicable) allocated to the period. The entity shall allocate the expected premium receipts to each period of insurance contract services:
(a) on the basis of the passage of time; but
(b) if the expected pattern of release of risk during the coverage period differs significantly from the passage of time, then on the basis of the expected timing of incurred insurance service expenses.

Para B127 An entity shall apply paragraph B126 to determine when insurance contract services are provided. This determines the pattern of recognition of insurance revenue. The entity shall change the basis of allocation between paragraphs B126(a) and B126(b) if facts and circumstances change. Such a change is a change in accounting estimate applying IAS 8.

Interlinks:

Insurance finance income or expenses (B128–B136)

Para B128 Paragraph 87 requires an entity to include in insurance finance income or expenses the effect of the time value of money and financial risk and changes therein. For the purposes of IFRS 17: (a) assumptions about inflation based on an index of prices or rates are financial risk assumptions; (b) assumptions about inflation based on an entity’s expectation of specific price changes are not financial risk; and (c) changes in measurement caused by changes in the value of underlying items are changes arising from financial risk.

TInsurance finance income or expenses — guidan...

Para B130 Paragraph 88 requires an entity to make an accounting policy choice between presenting all insurance finance income or expenses in profit or loss, or disaggregating between profit or loss and OCI. An entity shall apply its choice of accounting policy to portfolios of insurance contracts. In assessing the appropriate policy for a portfolio, the entity shall consider the relationship between the assets and the insurance contracts.

TInsurance finance income or expenses — guidan...

Para B131 If paragraph 88(b) applies, an entity shall include in profit or loss an amount determined by a systematic allocation that results in the remaining balance in accumulated OCI at the date of derecognition of a group being zero (see paragraph 92).

TInsurance finance income or expenses — guidan...

Para B132 For insurance contracts without direct participation features, the systematic allocation in paragraph B131 is determined using the discount rates determined at the date of initial recognition (locked-in rates). The entity shall recognise insurance finance income or expenses in profit or loss based on a systematic method using these locked-in rates, with any difference from total IFIE recorded in OCI.

Para B134 For insurance contracts with direct participation features, if the entity disaggregates IFIE, the amount in profit or loss shall be determined by a systematic allocation of the expected total IFIE, based on a method reflecting the characteristics of the contract and the entity’s holding of underlying items.

Para B136 If an entity holds reinsurance contracts and disaggregates IFIE for the underlying insurance contracts into profit or loss and OCI, the entity may also disaggregate IFIE for the reinsurance contracts held. The entity is not required to adopt the same policy for the reinsurance contracts held as it uses for the underlying insurance contracts.

Interim financial statements (B137)

Para B137 If an entity prepares interim financial statements applying IAS 34, the entity shall make an accounting policy choice as to whether to change the treatment of accounting estimates made in previous interim financial statements when applying IFRS 17 in subsequent interim financial statements and in the annual reporting period.

Appendix C — Effective Date and Transition

Effective date

Para C1 An entity shall apply IFRS 17 for annual reporting periods beginning on or after 1 January 2023. If an entity applies IFRS 17 earlier, it shall disclose that fact. Early application is permitted for entities that apply IFRS 9 on or before the date of initial application of IFRS 17.

TDescription of transition approach

Para C2 For the purposes of the transition requirements: (a) the date of initial application is the beginning of the annual reporting period in which an entity first applies IFRS 17; and (b) the transition date is the beginning of the annual reporting period immediately preceding the date of initial application.

Transition

Para C3 Unless it is impracticable to do so, an entity shall apply IFRS 17 retrospectively, except that: (a) an entity is not required to present the quantitative information required by paragraph 28(f) of IAS 8; and (b) an entity shall not apply the option in paragraph B115 for periods before the transition date.

TDescription of transition approachTDescription of full retrospective approach

Para C4 To apply IFRS 17 retrospectively, an entity shall at the transition date: (a) identify, recognise and measure each group of insurance contracts as if IFRS 17 had always applied; (aa) identify, recognise and measure any assets for insurance acquisition cash flows as if IFRS 17 had always applied; (b) derecognise any existing balances that would not exist had IFRS 17 always applied; and (c) recognise any resulting net difference in equity.

Para C5 If, and only if, it is impracticable for an entity to apply paragraph C3 for a group of insurance contracts, an entity shall apply: (a) the modified retrospective approach in paragraphs C6–C19A; or (b) the fair value approach in paragraphs C20–C24B.

Modified retrospective approach (C6–C19A)

Para C6 The objective of the modified retrospective approach is to achieve the closest outcome to retrospective application possible using reasonable and supportable information available without undue cost or effort.

MCSM — modified retrospective approachTDescription of modified retrospective approac...

Para C7 To achieve the objective of the modified retrospective approach while limiting the modifications, the entity shall only use the modifications in paragraphs C8–C19A to the extent that the entity does not have reasonable and supportable information to apply a retrospective approach.

Para C8 To the extent permitted by paragraph C7, an entity shall determine the following at the transition date, using information available at the transition date: (a) how to identify groups of insurance contracts, applying paragraphs 14–24; (b) whether an insurance contract meets the definition of an insurance contract with direct participation features, applying paragraphs 71(a)–(b) and B101–B109; (c) how to identify discretionary cash flows for insurance contracts without direct participation features, applying paragraphs B98–B100; and (d) whether the terms of an insurance contract with no direct participation features establish a contractual obligation for the entity to repay amounts to the policyholder regardless of whether an insured event occurs.

Para C9 To the extent permitted, an entity shall classify a liability for settlement of claims incurred before an insurance contract was acquired in a transfer of insurance contracts (or in a business combination) as a liability for incurred claims, not as a liability for remaining coverage.

Para C10 To the extent permitted, an entity shall determine the contractual service margin or loss component of the liability for remaining coverage at the transition date by: (a) for the contractual service margin at the transition date, measuring the fulfilment cash flows at the transition date, (b) determining the total insurance revenue earned before the transition date, and (c) deducting (b) from (a).

Para C11 If the entity cannot estimate the total revenue earned, it shall determine the contractual service margin at the transition date by: (a) assuming the CSM was zero at initial recognition; and (b) determining the amount of the contractual service margin at the transition date from the remaining coverage, adjusted for the time value of money and financial risk.

Para C13 To the extent permitted, an entity shall determine the discount rates that applied at the date of initial recognition using an observable yield curve that, for at least three years immediately before the transition date, approximates the yield curve estimated applying paragraphs 36 and B72–B85, if such an observable yield curve exists.

Para C14 If an observable yield curve in paragraph C13 does not exist, the entity shall determine the discount rates that applied at initial recognition by estimating such yield curves, using available data. This estimation shall be based on observable market data adjusted for the characteristics of the insurance contracts.

Para C15 To the extent permitted, an entity shall determine the risk adjustment for non-financial risk at each date before the transition date by adjusting the risk adjustment at the transition date for the expected release of risk before the transition date. The expected release shall be determined by reference to the release pattern for similar insurance contracts currently issued.

Para C17 To the extent permitted, an entity is not required to divide groups of insurance contracts into annual cohorts (applying paragraph 22) for groups of contracts that, on the basis of information available at the transition date, the entity concludes did not include contracts issued more than one year apart. However, the groups must still be divided between onerous, profitable, and other contracts.

Para C19 If an entity chooses to disaggregate insurance finance income or expenses applying paragraph 88(b), the entity may determine the cumulative amount of insurance finance income or expenses recognised in OCI at the transition date by using one of the methods in paragraphs C19A.

Para C19A An entity may determine the cumulative OCI amount at the transition date either: (a) retrospectively (to the extent practicable); or (b) as zero — which means the amount included in profit or loss in periods after the transition date will include amounts that otherwise would have been recognised in OCI before the transition date.

Fair value approach (C20–C24B)

Para C20 To apply the fair value approach, an entity shall determine the contractual service margin or loss component of the liability for remaining coverage at the transition date as the difference between the fair value of a group of insurance contracts at that date and the fulfilment cash flows measured at that date. In determining that fair value, an entity shall not apply paragraph 47 of IFRS 13 (relating to demand features).

MCSM — fair value approachTDescription of fair value approach

Para C21 In applying the fair value approach, an entity may use the following modifications: (a) the entity may classify the insurance contracts into groups applying paragraphs 14–24 using information available at the transition date rather than at initial recognition; (b) the entity is not required to apply paragraph 22 (annual cohorts); and (c) the entity shall apply paragraphs C22–C24.

Para C22 To the extent permitted, the discount rates at initial recognition shall be determined using the observable yield curve method described in paragraph C13 or, if not available, estimated using paragraph C14.

Para C23 To the extent permitted, an entity shall determine the risk adjustment at the date of initial recognition on the basis of the risk adjustment at the transition date adjusted for the expected release of risk before the transition date.

Para C24 If the fair value of a group of insurance contracts at the transition date is less than the fulfilment cash flows measured at that date, the contractual service margin is zero and the entity shall recognise a loss component by adjusting the liability for remaining coverage at the transition date.

Para C24A An entity applying the fair value approach to a group of insurance contracts shall determine at the transition date the amounts to use for applying paragraph 88(b) (disaggregation of IFIE between profit or loss and OCI) by determining the cumulative amount of insurance finance income or expenses recognised in OCI at the transition date, either retrospectively or assuming zero.

Comparative information (C25–C28)

Para C25 An entity may also present adjusted comparative information applying IFRS 17 for any earlier periods presented, but is not required to do so.

Para C26 If an entity elects to present adjusted comparative information applying IFRS 17, the adjusted comparative information shall reflect IFRS 17 for each comparative period presented. An entity that presents adjusted comparative information need not apply IAS 8 to the adjustments required by paragraphs C3–C5.

Para C27 If an entity presents unadjusted comparative information and disclosures for any earlier periods, it shall clearly identify the information that has not been adjusted, disclose that it has been prepared on a different basis, and explain that basis.

Para C28 An entity need not provide the disclosure of previously unpublished claims development information required by paragraph 130 for the reporting periods before the beginning of the annual reporting period immediately preceding the date of initial application. If the entity does not provide that disclosure, it shall disclose that fact.

Redesignation of financial assets (C29–C33A)

Para C29 At the date of initial application, an entity that had applied IFRS 9 before may: (a) reassess whether an eligible financial asset meets the IFRS 9 classification conditions; (b) revoke designation at FVTPL if the condition is no longer met; (c) designate assets as FVTPL; (d) designate equity investments at FVOCI; (e) revoke FVOCI designation for equity investments.

TBDisclosure of redesignation of financial asse...

Para C30 An entity that applies paragraph C29 shall not be required to restate prior periods. The entity may restate prior periods if, and only if, it is possible to do so without the use of hindsight. If an entity does not restate prior periods, it shall recognise in the opening retained earnings (or other component of equity) any difference between the previous carrying amount and the carrying amount at the date of initial application.

Para C31 If an entity did not apply IFRS 9 before, it shall apply IFRS 9 at the same time as IFRS 17 at the date of initial application. The entity shall classify its financial assets on the basis of the facts and circumstances at the date of initial application.

Para C32 An entity applying paragraph C31 shall apply the transition requirements of IFRS 9 with the date of initial application of IFRS 17 being the date of initial application for IFRS 9 as well.

TBDisclosure of redesignation of financial asse...

Para C33 An entity applying paragraph C31 or C29 shall disclose: (a) the basis for determining eligible financial assets for classification or designation changes at the date of initial application; and (b) whether and how the entity applied the exception in paragraph C31 of IFRS 9 to determine the credit risk of financial assets at initial recognition.

Withdrawal of IFRS 4

Para C34 IFRS 17 supersedes IFRS 4 Insurance Contracts, as amended in 2020.

In our IFRS 17 Engine, FY2021 is the transition date. The modified retrospective approach is used, with opening balances (UPR, DAC, reserves) at FY2021 representing transition values. Calculations produce results for FY2022–FY2025 using FY2021 as the baseline.

Appendix D — Amendments to Other Standards

This appendix is an integral part of IFRS 17 Insurance Contracts. It sets out amendments to other Standards that are a consequence of the IASB issuing IFRS 17. An entity shall apply these amendments when it applies IFRS 17.

Amendments to IFRS 1 First-time Adoption

IFRS 1 References to IFRS 4 are replaced by references to IFRS 17. A first-time adopter of IFRS may apply the transition requirements of IFRS 17 (paragraphs C1–C34) using the date of transition to IFRSs as the transition date. An entity shall apply the full retrospective approach unless impracticable, in which case the modified retrospective approach or fair value approach may be used.

Amendments to IFRS 3 Business Combinations

IFRS 3 Paragraph 17 is amended. The acquirer shall classify and designate insurance contracts acquired in a business combination in accordance with the contractual terms and other factors at the acquisition date, except for the distinction between insurance contracts and investment contracts in IFRS 17. The acquirer shall treat the acquisition date as the date of initial recognition for IFRS 17 purposes.

Amendments to IFRS 5 Non-current Assets Held for Sale

IFRS 5 Paragraph 5 is amended to include a reference to IFRS 17. Groups of insurance contracts within the scope of IFRS 17 are excluded from the measurement requirements of IFRS 5.

Amendments to IFRS 7 Financial Instruments: Disclosures

IFRS 7 Paragraph 3(d) is amended. IFRS 7 does not apply to insurance contracts within the scope of IFRS 17, except as required by IFRS 17 for credit risk disclosures related to reinsurance contracts held.

Amendments to IFRS 9 Financial Instruments

IFRS 9 Key amendments include: (a) paragraph 2.1(e) is amended to clarify that rights and obligations within the scope of IFRS 17 are excluded from IFRS 9, except for separated embedded derivatives and separated investment components; (b) paragraph 2.1(e)(ii) is added for insurance acquisition cash flows to which paragraphs 28B–28F of IFRS 17 apply.

Amendments to IFRS 15 Revenue from Contracts with Customers

IFRS 15 Paragraph 5(a) is amended. Insurance contracts within the scope of IFRS 17 are excluded from IFRS 15, including fixed-fee service contracts to which the entity chooses to apply IFRS 17 (see paragraph 8 of IFRS 17). If an entity applies IFRS 15 to a fixed-fee service contract applying paragraph 8, it applies IFRS 15 to that contract in its entirety.

Amendments to IAS 1 Presentation of Financial Statements

IAS 1 Paragraph 7 is amended to include the definitions of insurance revenue and insurance service expenses from IFRS 17. Paragraph 82(a) is amended to present insurance revenue from insurance contracts issued within the scope of IFRS 17 as a separate line item.

Amendments to IAS 16 Property, Plant and Equipment

IAS 16 Paragraph 29A is added permitting an entity to include directly attributable costs of self-constructed assets as insurance acquisition cash flows in the fulfilment cash flows of a group of insurance contracts, if those assets are used solely to fulfil insurance contracts.

Amendments to IAS 28 Investments in Associates and Joint Ventures

IAS 28 Paragraph 18 is amended. In applying the equity method, an investor shall apply IFRS 17 to insurance contracts held by an associate or joint venture, and the entity shall use the associate or joint venture’s IFRS 17 measurements in its equity method accounting.

Amendments to IAS 32 Financial Instruments: Presentation

IAS 32 Paragraph 4(c) is amended. IAS 32 applies to derivatives embedded in insurance contracts only if IFRS 17 requires the entity to separate them, and to investment components separated from insurance contracts applying IFRS 17.

Amendments to IAS 36 Impairment of Assets

IAS 36 Paragraph 2(h) is amended. IAS 36 does not apply to assets arising from insurance acquisition cash flows within the scope of IFRS 17 paragraphs 28B–28F, as IFRS 17 includes its own impairment requirements for these assets.

Amendments to IAS 37 Provisions, Contingent Liabilities and Contingent Assets

IAS 37 Paragraph 5(e) is amended. IAS 37 does not apply to insurance contracts and other contracts within the scope of IFRS 17.

Amendments to IAS 38 Intangible Assets

IAS 38 Paragraph 3(d) is amended. IAS 38 does not apply to insurance acquisition cash flows that are assets within the scope of IFRS 17 paragraphs 28B–28F. However, IAS 38 applies to other intangible assets acquired or developed by an insurance entity.

Withdrawal of other Standards and Interpretations

Withdrawals IFRS 17 supersedes: (a) IFRS 4 Insurance Contracts, issued in 2004 and amended in 2005, 2008, 2014 and 2020; (b) SIC-27 Evaluating the Substance of Transactions Involving the Legal Form of a Lease (to the extent relevant); and (c) IFRIC 12 Service Concession Arrangements (to the extent relevant to insurance contracts).

IFRS 17 Taxonomy Elements

The IFRS 17 Taxonomy provides standardised XBRL elements for digital reporting of insurance contracts. Each element below is linked to its source paragraph(s) in the standard. Click any paragraph reference to navigate directly to the verbatim text.

135 elements across 17 categories — based on the IFRS Taxonomy 2017 Update for IFRS 17 Insurance Contracts.

Statement of Financial Position(4 elements)

InsuranceContractsIssuedThatAreAssets

M · Disclosure

Insurance contracts issued that are assets

InsuranceContractsIssuedThatAreLiabilities

M · Disclosure

Insurance contracts issued that are liabilities

ReinsuranceContractsHeldThatAreAssets

M · Disclosure

Reinsurance contracts held that are assets

ReinsuranceContractsHeldThatAreLiabilities

M · Disclosure

Reinsurance contracts held that are liabilities

Statement(s) of Financial Performance(8 elements)

InsuranceServiceResult

M · Disclosure

Insurance service result

InsuranceRevenue

M · Disclosure

Insurance revenue

InsuranceServiceExpenses

M · Disclosure

Insurance service expenses from insurance contracts issued

IncomeExpensesFromReinsuranceContractsHeld

M · Disclosure

Income (expenses) from reinsurance contracts held

IncomeFromAmountsRecoveredFromReinsurer

M · Disclosure

Income from amounts recovered from reinsurer

ExpensesFromAllocationOfPremiumsPaid

M · Disclosure

Expenses from allocation of premiums paid to reinsurer

InsuranceFinanceIncomeExpensesIssued

M · Disclosure

Insurance finance income (expenses) from insurance contracts issued

FinanceIncomeExpensesReinsuranceHeld

M · Disclosure

Finance income (expenses) from reinsurance contracts held

OCI Items(4 elements)

OCIInsuranceFinanceIncomeExpensesReclassify

M · Disclosure

OCI — insurance finance income (expenses), will be reclassified

ReclassificationAdjustmentsInsuranceFinance

M · Disclosure

Reclassification adjustments on insurance finance income (expenses)

OCIInsuranceFinanceIncomeExpensesNotReclassify

M · Disclosure

OCI — insurance finance income (expenses), will not be reclassified

OCIFinanceIncomeExpensesReinsuranceHeld

M · Disclosure

OCI — finance income (expenses) from reinsurance contracts held

Scope and Contract Definition(6 elements)

DescriptionOfInsuranceContract

T · Disclosure

Description of insurance contract

DescriptionOfReinsuranceContract

T · Disclosure

Description of reinsurance contract

DescriptionOfInvestmentComponentSeparation

T · Disclosure

Description of investment component separation

DescriptionOfPortfoliosOfInsuranceContracts

T · Disclosure

Description of portfolios of insurance contracts

DescriptionOfGroupsOfInsuranceContracts

T · Disclosure

Description of groups of insurance contracts

DescriptionOfRecognitionOfInsuranceContracts

T · Disclosure

Description of recognition of insurance contracts

Fulfilment Cash Flows & Measurement(5 elements)

FulfilmentCashFlows

M · Disclosure

Fulfilment cash flows

EstimatesOfPresentValueOfFutureCashFlows

M · Disclosure

Estimates of present value of future cash flows

RiskAdjustmentForNonFinancialRisk

M · Disclosure

Risk adjustment for non-financial risk

ContractualServiceMargin

M · Disclosure

Contractual service margin

DiscountRatesUsedForInsuranceContracts

T · Disclosure

Discount rates used for insurance contracts

Premium Allocation Approach(9 elements)

DescriptionOfCriteriaSatisfiedWhenUsingPAA

T · Disclosure

Description of criteria satisfied when using PAA

DescriptionOfAdjustmentForTimeValueOfMoneyPAA

T · Disclosure

Description of adjustment for time value of money — PAA

DescriptionOfMethodToRecogniseAcquisitionCashFlowsPAA

T · Disclosure

Description of method to recognise acquisition cash flows — PAA

LiabilityForRemainingCoverage

M · Disclosure

Liability for remaining coverage

LiabilityForIncurredClaims

M · Disclosure

Liability for incurred claims

LossComponentOfLRC

M · Disclosure

Loss component of LRC

InsuranceRevenueChangesInLRC

M · Disclosure

Insurance revenue — changes in liability for remaining coverage

InsuranceContractsPAAAppliedMember

M · Disclosure

Insurance contracts — PAA applied [Member]

InsuranceContractsOtherThanPAAMember

M · Disclosure

Insurance contracts — other than PAA [Member]

Onerous Contracts(3 elements)

LossRecoveryComponentReinsurance

M · Disclosure

Loss-recovery component — reinsurance

LossesOnOnerousContracts

M · Disclosure

Losses on onerous contracts

LossComponent

M · Disclosure

Loss component

Reinsurance Contracts Held(3 elements)

ReinsuranceContractsHeldAsset

M · Disclosure

Reinsurance contracts held — asset

DisclosureOfCreditRiskFromReinsurance

TB · Disclosure

Disclosure of credit risk from reinsurance contracts

MaximumExposureToCreditRiskReinsurance

M · Disclosure

Maximum exposure to credit risk — reinsurance

Reconciliation of Insurance Contracts(15 elements)

IncreaseDecreaseInsuranceServiceResult

M · Disclosure

Increase (decrease) through insurance service result

IncreaseDecreaseThroughInsuranceRevenue

M · Disclosure

Increase (decrease) through insurance revenue

IncreaseDecreaseThroughInsuranceServiceExpenses

M · Disclosure

Increase (decrease) through insurance service expenses

IncreaseDecreaseThroughIncurredClaims

M · Disclosure

Increase (decrease) through incurred claims

IncreaseDecreaseThroughAmortisationOfAcquisitionCashFlows

M · Disclosure

Increase (decrease) through amortisation of acquisition cash flows

IncreaseDecreaseThroughChangesPastService

M · Disclosure

Increase (decrease) through changes — past service

IncreaseDecreaseThroughChangesFutureService

M · Disclosure

Increase (decrease) through changes — future service

IncreaseDecreaseThroughChangesCurrentService

M · Disclosure

Increase (decrease) through changes — current service

IncreaseDecreaseThroughCSMRecognisedInPL

M · Disclosure

Increase (decrease) through CSM recognised in P&L

IncreaseDecreaseThroughExperienceAdjustments

M · Disclosure

Increase (decrease) through experience adjustments

IncreaseDecreaseThroughCashFlows

M · Disclosure

Increase (decrease) through cash flows

IncreaseDecreaseThroughPremiumsReceived

M · Disclosure

Increase (decrease) through premiums received

IncreaseDecreaseThroughAcquisitionCashFlows

M · Disclosure

Increase (decrease) through acquisition cash flows

IncreaseDecreaseThroughClaimsPaid

M · Disclosure

Increase (decrease) through claims paid

IncreaseDecreaseThroughInsuranceFinanceIE

M · Disclosure

Increase (decrease) through insurance finance income or expenses

Insurance Revenue Analysis(8 elements)

DisclosureOfAnalysisOfInsuranceRevenue

TB · Disclosure

Disclosure of analysis of insurance revenue

InsuranceRevenueServiceExpensesIncurred

M · Disclosure

Insurance revenue — service expenses incurred during period

InsuranceRevenueChangeInRA

M · Disclosure

Insurance revenue — change in risk adjustment

InsuranceRevenueCSMRecognised

M · Disclosure

Insurance revenue — CSM recognised

InsuranceRevenueRecoveryOfAcquisitionCashFlows

M · Disclosure

Insurance revenue — recovery of acquisition cash flows

InsuranceRevenueModifiedRetrospective

M · Disclosure

Insurance revenue — modified retrospective

InsuranceRevenueFairValueApproach

M · Disclosure

Insurance revenue — fair value approach

InsuranceRevenueRecognition

T · Disclosure

Insurance revenue recognition guidance

Insurance Finance Income/Expenses(4 elements)

InsuranceFinanceIncomeExpenses

M · Disclosure

Insurance finance income (expenses)

ExplanationOfInsuranceFinanceIncomeExpenses

T · Disclosure

Explanation of insurance finance income (expenses)

ExplanationOfRelationshipInsuranceFinanceAndInvestmentReturn

T · Disclosure

Explanation of relationship between insurance finance and investment return

InsuranceFinanceIncomeExpensesGuidance

T · Disclosure

Insurance finance income or expenses — guidance

Significant Judgements & Estimates(7 elements)

DescriptionOfSignificantJudgementsApplyingIFRS17

T · Disclosure

Description of significant judgements applying IFRS 17

DescriptionOfInputsMethodsAndProcessesForEstimatingFutureCashFlows

T · Disclosure

Description of inputs, methods and processes for estimating future cash flows

DescriptionOfApproachToDetermineRiskAdjustment

T · Disclosure

Description of approach to determine risk adjustment

ConfidenceLevelUsedToDetermineRiskAdjustment

PER · Disclosure

Confidence level used to determine risk adjustment

DescriptionOfYieldCurveUsed

T · Disclosure

Description of yield curve used

DisclosureOfInputsToMethodsUsedToMeasureContracts

TB · Disclosure

Disclosure of inputs to methods used to measure contracts

DisclosureOfYieldCurve

TB · Disclosure

Disclosure of yield curve

Nature and Extent of Risks(14 elements)

DisclosureOfNatureAndExtentOfRisks

TB · Disclosure

Disclosure of nature and extent of risks

DescriptionOfObjectivesAndPoliciesForManagingRisks

T · Disclosure

Description of objectives and policies for managing risks

DescriptionOfTermsAndConditionsOfInsuranceContracts

T · Disclosure

Description of terms and conditions of insurance contracts

DescriptionOfMethodsUsedToMeasureInsuranceRisk

T · Disclosure

Description of methods used to measure insurance risk

SummaryOfInsuranceActivityDuringPeriod

T · Disclosure

Summary of insurance activity during period

ConcentrationsOfInsuranceRisk

TB · Disclosure

Concentrations of insurance risk

SensitivityAnalysisInsuranceRisk

TB · Disclosure

Sensitivity analysis — insurance risk

EffectOnPLAndEquityOfReasonablyPossibleChanges

M · Disclosure

Effect on P&L and equity of reasonably possible changes

DescriptionOfMethodsAndAssumptionsSensitivityAnalysis

T · Disclosure

Description of methods and assumptions — sensitivity analysis

DescriptionOfChangesFromPriorPeriodSensitivityAnalysis

T · Disclosure

Description of changes from prior period — sensitivity analysis

DisclosureOfClaimsDevelopment

TB · Disclosure

Disclosure of claims development

ClaimsDevelopment

M · Disclosure

Claims development

DisclosureOfLiquidityRisk

TB · Disclosure

Disclosure of liquidity risk from insurance contracts

MaturityAnalysisInsuranceContracts

M · Disclosure

Maturity analysis — insurance contracts

XBRL Dimensional Elements(14 elements)

DisaggregationOfInsuranceContractsAxis

A · Disclosure

Disaggregation of insurance contracts [Axis]

InsuranceContractsIssuedMember

M · Disclosure

Insurance contracts issued [Member]

ReinsuranceContractsHeldMember

M · Disclosure

Reinsurance contracts held [Member]

InsuranceContractsByComponentsAxis

A · Disclosure

Insurance contracts by components [Axis]

EstimatesOfPresentValueOfFutureCashFlowsMember

M · Disclosure

Estimates of PV of future cash flows [Member]

RiskAdjustmentForNonFinancialRiskMember

M · Disclosure

Risk adjustment for non-financial risk [Member]

ContractualServiceMarginMember

M · Disclosure

Contractual service margin [Member]

LossComponentMember

M · Disclosure

Loss component [Member]

InsuranceContractsByRemainingCoverageAxis

A · Disclosure

Insurance contracts by remaining coverage and incurred claims [Axis]

NetLiabilitiesForRemainingCoverageMember

M · Disclosure

Net liabilities for remaining coverage excl. loss component [Member]

LiabilitiesForIncurredClaimsMember

M · Disclosure

Liabilities for incurred claims [Member]

TypesOfRisksAxis

A · Disclosure

Types of risks [Axis]

InsuranceRiskMember

M · Disclosure

Insurance risk [Member]

FinancialRiskMember

M · Disclosure

Financial risk [Member]

Transition Requirements(7 elements)

CSMModifiedRetrospective

M · Disclosure

CSM — modified retrospective approach

CSMFairValueApproach

M · Disclosure

CSM — fair value approach

DescriptionOfTransitionApproach

T · Disclosure

Description of transition approach

DisclosureOfRedesignationOfFinancialAssets

TB · Disclosure

Disclosure of redesignation of financial assets at transition

DescriptionOfFullRetrospectiveApproach

T · Disclosure

Description of full retrospective approach

DescriptionOfModifiedRetrospectiveApproach

T · Disclosure

Description of modified retrospective approach

DescriptionOfFairValueApproach

T · Disclosure

Description of fair value approach

Application Guidance Elements(6 elements)

DescriptionOfDefinitionOfInsuranceContract

T · Disclosure

Definition of insurance contract — guidance

SignificantInsuranceRisk

T · Disclosure

Significant insurance risk

InsuranceAcquisitionCashFlows

M · Disclosure

Insurance acquisition cash flows

DiscountRatesDetermination

T · Disclosure

Discount rates — determination guidance

RiskAdjustmentTechniques

T · Disclosure

Risk adjustment — techniques

CSMRecognitionPattern

T · Disclosure

CSM recognition pattern

Other Elements(18 elements)

ReversalsOfLossesOnOnerousContracts

M · Disclosure

Reversals of losses on onerous contracts

DisclosureOfReconciliationByRemainingCoverageAndIncurredClaims

TB · Disclosure

Disclosure of reconciliation by remaining coverage and incurred claims

DisclosureOfReconciliationByComponents

TB · Disclosure

Disclosure of reconciliation by components

InsuranceContractsLiabilityAsset

M · Disclosure

Insurance contracts liability (asset)

InsuranceContractsThatAreAssets

M · Disclosure

Insurance contracts that are assets

InsuranceContractsThatAreLiabilities

M · Disclosure

Insurance contracts that are liabilities

InvestmentComponentsExcluded

M · Disclosure

Investment components excluded from revenue and expenses

DisclosureOfEffectOfContractsInitiallyRecognised

TB · Disclosure

Disclosure of effect of contracts initially recognised

EffectOfContractsAcquiredInPeriod

M · Disclosure

Effect of contracts acquired in period

EffectOfOnerousGroupsInitiallyRecognised

M · Disclosure

Effect of onerous groups initially recognised

DisclosureOfCSMExpectedRecognition

TB · Disclosure

Disclosure of expected recognition of CSM in P&L

ExplanationWhenEntityExpectsToRecogniseCSM

T · Disclosure

Explanation of when entity expects to recognise CSM

DescriptionOfCompositionOfUnderlyingItemsDPF

T · Disclosure

Description of composition of underlying items — DPF

FairValueOfUnderlyingItemsDPF

M · Disclosure

Fair value of underlying items — DPF

EffectOnCSMChoiceNotToAdjustDPF

M · Disclosure

Effect on CSM of choice not to adjust — DPF

DescriptionOfReasonForChangeBasisOfDisaggregationDPF

T · Disclosure

Reason for change in basis of disaggregation — DPF

DisclosureOfTransitionAmounts

TB · Disclosure

Disclosure of transition amounts

CSMAllOtherContracts

M · Disclosure

CSM — all other contracts

↔

Cross-Reference Map

This map shows how the major sections of IFRS 17 interconnect. Click any badge to navigate to the referenced section.

Objective (§1–2)

→ Scope §3→ Recognition §25→ Measurement §29→ Presentation §78→ Disclosure §93

Scope (§3–13)

→ Appendix A Definitions→ B2–B30 Insurance contract→ B31–B35 Separation→ IFRS 9 Derivatives→ IFRS 15 Services

Aggregation (§14–24)

→ Onerous §47→ PAA §18→ Recognition §28→ Reinsurance §61→ Annual cohorts §22

Recognition (§25–28F)

→ Aggregation §14→ Measurement §32→ B35A–B35D Acquisition→ PAA §59(a)

Measurement (§29–52)

→ FCF §33–35→ Discount rates §36→ Risk adj §37→ CSM §38–39→ PAA §53→ B36–B92

PAA (§53–59)

→ LRC §55→ LIC §59(b)→ Onerous §57–58→ DAC §59(a)→ B126 Revenue→ Reinsurance PAA §69→ Disclosure §97

Onerous (§47–52)

→ Loss component §49→ Aggregation §16(a)→ PAA onerous §57–58→ Reinsurance §66A–66B→ Disclosure §103(b)(iv)

Reinsurance (§60–70A)

→ Recognition §62→ Risk adj §64→ Loss recovery §66A–66B→ PAA §69→ Not onerous §68→ Presentation §82

P&L (§80–92)

→ Revenue §83→ Service expenses §84→ IFIE §87→ OCI choice §88–89→ B120–B127→ B128–B136

Disclosure (§93–132)

→ PAA disclosures §97→ Reconciliations §100–105→ IFIE §110→ Transition §114→ Judgements §117→ Risk §121–132

Transition (C1–C34)

→ Retrospective C3–C4→ Modified retro C6–C19A→ Fair value C20–C24B→ Comparatives C25→ IFRS 9 redesig C29→ Withdrawal C34

Application Guidance (B1–B137)

→ Definition B2–B30→ Separation B31–B35→ Measurement B36–B92→ CSM B96–B119→ Revenue B120–B127→ IFIE B128–B136

Amendments to Other Standards (App D)

→ IFRS 1 First-time→ IFRS 3 BusComb→ IFRS 5 HfS→ IFRS 7 Disclosures→ IFRS 9 FinInstr→ IFRS 15 Revenue→ IAS 1 Presentation→ IAS 36 Impairment→ IAS 37 Provisions

Paragraph Count Summary

Section	Paragraphs	Count	Key Topics
Objective	1–2	2	Purpose, enforceability
Scope	3–8A	8	Insurance contracts, exclusions, fixed-fee services
Combining/Separating	9–13	5	Combinations, investment components, IFRS 9/15
Level of Aggregation	14–24	11	Portfolios, groups, annual cohorts
Recognition	25–28F	8	Recognition point, acquisition cash flows
Measurement	29–52	24	FCF, discount rates, RA, CSM, onerous
PAA	53–59	7	Eligibility, LRC, LIC, DAC, onerous testing
Reinsurance	60–70A	12	Recognition, measurement, loss recovery, PAA
Investment contracts	71	1	DPF modifications
Modification/Derecognition	72–77	6	Modification triggers, derecognition criteria
Presentation	78–79	2	Balance sheet, acquisition cash flow assets
P&L	80–92	13	Service result, revenue, IFIE, OCI choice
Disclosure	93–132	40	Reconciliations, judgements, risks
Appendix A	—	21 terms	All defined terms
Appendix B	B1–B137	156	Application guidance
Appendix C	C1–C34	58	Transition
Appendix D	—	14+	Amendments to IFRS 1, 3, 5, 7, 9, 15, IAS 1, 16, 28, 32, 36, 37, 38
Total		~374

IFRS 17Insurance Contracts

Objective

Scope

Combination of insurance contracts

Separating components from an insurance contract

Level of Aggregation of Insurance Contracts

Recognition

Insurance acquisition cash flows

Measurement

Measurement on initial recognition

Estimates of future cash flows

Discount rates

Risk adjustment for non-financial risk

Contractual service margin

Subsequent measurement

Insurance contracts with direct participation features

Onerous Contracts

Premium Allocation Approach

Reinsurance Contracts Held

PAA for reinsurance contracts held

Investment contracts with discretionary participation features

Modification and Derecognition

Presentation in the Statement of Financial Position

Recognition and Presentation in the Statement(s) of Financial Performance

Insurance service result

Insurance finance income or expenses

Disclosure

Appendix A — Defined Terms

Appendix B — Application Guidance

Definition of an insurance contract (B2–B30)

Significant insurance risk (B17–B23)

Examples of insurance contracts (B26–B30)

Separating components (B31–B35)

Insurance acquisition cash flows (B35A–B35D)

Measurement — Estimates of future cash flows (B36–B71)

Market variables and non-market variables (B42–B53)

Using current estimates (B54–B60)

Cash flows within the contract boundary (B61–B71)

Discount rates (B72–B85)

Risk adjustment for non-financial risk (B86–B92)

Contractual service margin (B96–B119F)

Coverage units (B119–B119F)

Insurance revenue (B120–B127)

Insurance finance income or expenses (B128–B136)

Interim financial statements (B137)

Appendix C — Effective Date and Transition

Effective date

Transition

Modified retrospective approach (C6–C19A)

Fair value approach (C20–C24B)

Comparative information (C25–C28)

Redesignation of financial assets (C29–C33A)

Withdrawal of IFRS 4

Appendix D — Amendments to Other Standards

IFRS 17 Taxonomy Elements

Cross-Reference Map

Objective (§1–2)

Scope (§3–13)

Aggregation (§14–24)

Recognition (§25–28F)

Measurement (§29–52)

PAA (§53–59)

Onerous (§47–52)

Reinsurance (§60–70A)

P&L (§80–92)

Disclosure (§93–132)

Transition (C1–C34)

Application Guidance (B1–B137)

Amendments to Other Standards (App D)

Paragraph Count Summary

IFRS 17
Insurance Contracts