Financial Services Ireland

Applying IFRS 17

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Applying IFRS 17

The International Accounting Standards Board (IASB) issued IFRS17 Insurance Contracts (the standard) in May 2017, effective for annual periods beginning on or after 1 January 2021, with earlier application permitted. IFRS 17 supersedes IFRS 4 Insurance Contracts, an interim standard issued in 2004 that allows entities to use a wide variety of accounting practices for insurance contracts.

More than 20 years in development, IFRS 17 represents a complete overhaul of accounting for insurance contracts.

The new standard will increase the transparency of insurers’ financial positions and performance, and is intended to make their financial statements more comparable with both other insurers and other industries. Scroll down to take a closer look at the new Insurance Contracts standard and click on the link below to download the publication in full.

What you need to know

  • The IASB issued IFRS 17, a comprehensive new accounting standard for insurance contracts in May 2017
  • IFRS 17 will become effective for annual reporting periods beginning on or after 1 January 2021, with early application permitted
  • The IFRS 17 model combines a current balance sheet measurement of insurance contracts with recognition of profit over the period that services are provided
  • The general model in the standard requires insurance contract liabilities to be measured using probability-weighted current estimates of future cash flows, an adjustment for risk, and a contractual service margin representing the profit expected from fulfilling the contracts
  • Effects of changes in the estimates of future cash flows and the risk adjustment relating to future services are recognised over the period services are provided rather than immediately in profit or loss
  • The standard includes specific adaptations for the measurement and presentation of insurance contracts with participation features; and for reinsurance contracts held
  • The standard contains a simplified model, which can be used for contracts with coverage periods of one year or less, or when doing so approximates the general model
  • Entities have an option to present the effect of changes in discount rates in profit or loss or in other comprehensive income

If you would like to discuss any of the topics raised in this report, please don’t hesitate to get in touch with me, or your usual  EY contact.

Thought Leaders


Ciara McKenna

Partner

Niamh O’Shaughnessy

Assurance Director, Insurance & Banking

Ciara Fitzpatrick

Director, Insurance




Applying IFRS 17

A closer look at the new Insurance Contracts Standard





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