Released on May 18th, 2017 following several public consultations, the new IFRS17« Insurance contracts » applicable as of January, 1st 2021 (with a comparative year as of January 1st 2020 as a benchmark) sets out the principles for the recognition, measurement and disclosure contracts within the scope of its application.
IFRS17 aims to harmonize the measurement and recognition of insurance contracts between European countries in compliance with all other IFRS, with a particular focus on options & guarantees valuation as well as liabilities estimation.
It applies to:
– Insurance contracts (including reinsurance treaties) issued
– Reinsurance treaties held
– Investment contracts issued with discretionary participation feature (provided that insurance contracts are also issued)
Several exceptions are defined outside the scope of IFRS17.
Institutions that are affected by this regulation have to review their valuation models & discount rates partly based on the premium allocation approach (PAA); which in some cases may simplify the liabilities estimation, the original contracts derecognition and the recognition of the new ones in the event of a change.
Applying IFRS17 to institutions impacts the operational organization of their activities: their actuarial model, accounting, data processing, validation of accounts and financial communication.
Axis alternatives supports you through the various steps to make your activities compliant; from the scoping phase to the operational implementation. The scoping phase aims to anticipate the strategic issues and the implementation steps according to an organization a, roadmap and an agreed budget.
The project phase secures the follow-up of the budget and planning with regular communication to management to share the progress and submit decisions on strategic choices.