Page 191 - India Insurance Report 2023- BIMTECH

India Insurance Report - Series II 179

IRDAI may also collaborate with other countries (those who have gone live and those who are
going to go live in the coming years. For example, Taiwan, SA).

It is rightly said, to walk fast, walk alone, to walk far, walk together.

1.2. Objectives of IFRS 17

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 the Standard 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. Thus, the financial statement will be a
representation of how the business has been conducted by the insurers.

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 (i.e., no discernible effect on the economics of the contract). Implied terms in a
contract include those imposed by law or regulation. The practices and processes for establishing contracts
with customers vary across legal jurisdictions, industries and entities. In addition, they may vary within
an entity (for example, they may depend on the class of customer or the nature of the promised goods or
services)

1.3. Key Benefits of IFRS 17

• The Standard provides a consistent set of principles for all aspects of financial reporting for insurance
contracts. Thereby removing the existing hurdle of inconsistencies and enabling a more comparable
and meaningful framework for companies, contracts, and industries.
• The new principle-based approach of the Standard aims to provide a more holistic approach to
measuring and presenting the insurance contracts across the industry reporting.

• The new accounting model under the Standard is highly transparent and aligns with insurance
accounting with the general IFRS accounting of other industries

IFRS 17 factsheet

The impact of the Standard is limited not only to the preparation of financial statements but also to
those charged with governance, investors, regulatory bodies, analysts and auditors. As such, the following
questions are raised:

Accounting & Governance Business processes, systems and data
Business Impact Transition