For most insurers, it involves a radical change from current reporting practices and a shift from reporting book values to an approach more based on market value under the current accounting standard (IFRS 4), insurers often look at their business from a net perspective, by subtracting the reinsured liability (ceded risks) from the gross liability to the policyholder and netting the financial results. IFRS 17 modifies this approach and introduces a new setting where insurers are required to account for reinsurance contracts held as standalone contracts, with specific obligations and benefits that should be assessed independently from the underlying contracts. Although this is also common practice under Solvency II, IFRS 17 poses specific requirements on accounting for reinsurance contracts.
This article aims to address the potential impacts of moving from the current framework to the new accounting standard, suggesting a number of steps that, taken in a timely manner, could aid in the process of moving from today’s perspective to the IFRS 17 world.
Download
- IFRS 17 – A New Approach to Reinsurance Contracts Held .pdf • 0,28 MB