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IFRS 17 Insurance Contracts

January 2014

FRC, EFRAG and the National Standard Setters ANC, ASCG and OIC issue report on the findings from the field-test on the revised IASB ED Insurance Contracts
 
FRC, EFRAG and the National Standard Setters ANC, ASCG and OIC issued a report summarising the findings from a field-test on the revised IASB's Exposure Draft Insurance Contracts.  The field-test was carried out by EFRAG, ANC, ASCG, FRC, OIC and in coordination with the IASB staff.

On 20 June 2013, the IASB published the revised Exposure Draft Insurance Contracts.

From July to October 2013, EFRAG and the National Standard Setters from France, Germany, Italy and the UK (ANC, ASCG, FRC and OIC respectively), in coordination with the IASB staff, carried out a joint field-test on whether the new requirements are operational, what their impact would be and the costs and benefits associated with introducing them.

The exercise was focused on the practical application of the new requirements. The participants were asked questions relating to the 2013 ED's five targeted proposals as well as further questions on other areas of the 2013 ED.

The most commonly stated areas of concern related to:
 
applying the 'mirroring approach' to contracts that specify a link to the returns on underlying items;
applying the revenue proposals to life insurance contracts; and
the mandatory requirement to use other comprehensive income for presenting the effects of changes in the discount rate on insurance liabilities.
EFRAG and National Standard Setters would like to thank all those that participated in this field-test.

The report can be downloaded here
 
October 2013

FRC’s Comment Letter on IASB’s ED Insurance Contracts
The FRC responded to the IASB on its Insurance ED on 25 October 2013.  A copy of the response can be accessed here.
 
October 2013

FRC’s Outreach event on IASB’s ED Insurance Contracts
The FRC held an outreach event on 2 October 2013.  The event was an opportunity to discuss the IASB’s recent Exposure Draft (ED) on insurance contracts and listen to views from UK constituents. 
 
The meeting was chaired by Roger Marshall and speakers on the day included Stephen Cooper (IASB Board Member) who highlighted the IASB’s proposals and the feedback to date. 
 
They were followed by Hugh Francis (Aviva) and Francesco Nagari (Deloitte) who gave the preparer and auditor perspective on those proposals.
 
The slides and a summary of the discussion on the day are included in the links.
September 2013
FRC’s Draft Comment Letter on IASB’s ED Insurance Contracts
FRC has issued its Draft Comment Letter on the IASB’s revised Exposure Draft Insurance Contracts (ED/2013/07) and can be downloaded here. Comments on the letter are invited by Thursday 10 October 2013 and should be sent to Seema Jamil-O’Neill at s.jamiloneill@frc.org.uk .
 
July 2013
FRC, EFRAG and the National Standard Setters ANC, ASCG and OIC invite companies to participate in field-testing the proposed new accounting for insurance contracts
On 20 June 2013, the IASB issued the revised Exposure Draft Insurance Contracts (ED) containing proposals on the recognition, measurement, presentation and disclosure of insurance contracts. EFRAG and National Standard Setters, in coordination with the IASB staff, are performing a field-test to evaluate how these proposals would affect European companies applying IFRS. Additionally, Insurance Europe has agreed to encourage their members to participate.

The field-test will start on 10 July 2013 and the deadline for completed questionnaires to be returned is 11 October 2013.

The details of this field test can be found here.

UK constituents interested in participating please contact Seema Jamil-O’Neill at s.jamiloneill@frc.org.uk.
 
Project History
ASB's Comment Letters to IASB and other papers on insurance

 ASB Comment letter on IASB's ED (November 2010)

 ASB Comment letter IASB's DP (November 2007)

 ASB Summary of IASB DP proposals (July 2007)

ASB briefing paper - implications of insurance accounting on other business sectors

The International Accounting Standards Board’s (IASB’s) predecessor organisation, the International Accounting Standards Committee (IASC), began a project on insurance contracts in 1997 because insurance contracts were excluded from the scope of other relevant IASC standards and, as a result, accounting practices for insurance contracts were diverse, and often differed from practices in other sectors.

When the IASB was constituted in 2001 as successor to IASC, it included the Insurance
Contracts project in its initial work plan. However, realising that it was not feasible to complete the project for implementation in 2005, it split the project into two phases. Phase 1’s scope was designed so as to enable the phase to be completed in time for 2005. The main objectives of this phase were to make limited improvements to accounting practices for insurance contracts, whilst trying to avoid requiring major changes that phase II might reverse. In order to achieve this, it proved necessary to permit most previous accounting practices for insurance contracts to continue. The Board completed Phase I by issuing IFRS 4 Insurance Contracts in 2004.

Phase II of the project is intended to be comprehensive and to result in a standard that will replace IFRS 4 and stand the test of time. The first stage of the work was completed with the publication in May 2007 of a discussion paper ‘Preliminary Views on Insurance Contracts’. When the paper was issued, the ASB published a Briefing Paper on the wider implications of the IASB’s proposals as well as a brief summary of the proposals—both of which are downloadable from this page. Later, the  ASB submitted a comment letter on the discussion paper.

The IASB had its first discussion of the comments received in February 2008 and commenced its re-deliberations in September 2008. It was soon agreed that the project should become a joint project of the IASB and the US standard-setter, the Financial Accounting Standards Board (FASB). Deliberations have continued on an almost monthly basis since, and the ASB is monitoring progress closely. An exposure draft of a proposed comprehensive standard is expected to be issued in due course. More details on the project can be downloaded from the IASB's website.

 

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