IFRS 17 is a new standard for accounting and valuation of insurance contracts, and it replaces the current IFRS 4 standard. IFRS 17 was published in May 2017 and its effective date is January 1st, 2021.
IFRS 17 has several purposes:
- Ensure a valuation that captures all aspects of the insurance contract. Examples of parts for which a more transparent accounting of the economic value is desired to achieve are embedded options and guarantees.
- Ensure transparent reporting information about the insurance contract. The insurance contract earnings impact should be clear as well as the risks and extent of these under the agreement. What the result are of the insurance business and the impact of investment of premiums received should also be clearer.
- Ensure comparability between products, companies and jurisdictions. IFRS 17 replaces most businesses between products and companies that currently exist. Furthermore, IFRS 17 mean that insurance contracts will be easier to compare with other type of contracts.
To achieve this, the new standard requires:
- A present value approach that takes into account all available information, and that is consistent with observable market data, is used in the valuation.
- That costs presents as they arise and the insurance contract result presents so that it reflects the company’s expected outcome of the commitment the company has undertaken.
FCG offer following services within interpretation and adaption to IFRS 17:
- Advising & Training
- GAP-analysis & planning
- Project management & resource support
- Systems evaluation & Systems planning
- Requirements specification & Implementation
- Controls & Validations
- Audit & Second Opinion
- Relationship between IFRS 17 and other IFRS-standards, such as IFRS 9 and IFRS 15
- Continuous updates and advise on the implementation of IFRS 17 into Swedish law and into the financial oversight process.