Page 36 - The Insurance Times August 2022
P. 36
INTERNATIONAL
FINANCIAL
REPORTING
STANDARD 17
(IFRS 17) - INSURANCE
CONTRACTS
Abstract
International Financial Reporting Standard 17 - Insurance Contracts, (IFRS 17), latest addition to Accounting Standards
has been issued by the International Accounting Standards Board and is expected to be effective from the reporting
periods beginning on or after 1st January 2023. It took about 20 years to give shape to this standard, is a testimony
to the special and complex nature of insurance transactions and insurance contracts. Several new concepts and new
models for measurements had to be introduced to meet the special reporting needs of insurance contracts. Adoption
of this new standard is likley to have significant changes for insurers, particularly life insurers. The standard prescribes
a simplified alternate measurement model called Premium Allocation Approach for those insurers who fullfill the
conditions prescribed. One eligibility criteria for premium allocation approach is policy period being one year or less.
Non-life insurers mostly issue annual policies. The current practices of non-life insurance industry to a great extent
seem to be in compliance with this model. However long term policy segment of non-life insurance might require
major changes, if the segment fails to fulfill the other eligibility criteria prescribed for adopting Premium Allocation
Approach. There is a huge need for developing proper understanding of various provisions of the standard, amongst
the stakeholders. The purpose of this write up is to, explore and develop some basic understanding of various provisions
of the standard, concepts and models introduced by it, and more particularly, flag different provisions of the standard
which might call for industry level deliberations to
About the author examine their applicability and relevance to non-life
industry. The mist around the provisions will disappear
S H Gejji
slowly and clarity will emerge as the experts throw more
Post Graduate in Commerce. - M.com
and more light on various provisions and as the insurers
Degree in Law. - LLB(General)
start adopting the new standard.
Fellow of Insurance Institute of India. - FIII
36 The Insurance Times, August 2022