The International Accounting Standards Board (IASB) has issued amendments to IFRS 17, Insurance Contracts, including a two-year deferral of the start date, to address concerns and implementation challenges identified following its introduction in May 2017
The amendments are effective for annual periods beginning on or after 1 January 2023 with earlier application permitted.
The standards-setter said the deferral of the effective date is intended to allow time for an orderly adoption of the amended IFRS 17 by jurisdictions around the world. This should enable more insurers to implement the new standard at the same time.
The IASB has also issued an amendment to the previous insurance standard, IFRS 4, so that eligible insurers can still apply IFRS 9 Financial Instruments alongside IFRS 17.
Overall, the amendments are designed to reduce costs by simplifying some requirements in the standard; make it easier to explain financial performance; and ease transition by deferring the effective date of the standard to 2023 and by providing additional relief to reduce the effort required when applying IFRS 17 for the first time.
They include additional scope exclusion for credit card contracts and similar contracts that provide insurance coverage as well as optional scope exclusion for loan contracts that transfer significant insurance risk, as well as clarifications and simplifications to the way in which insurance contracts are presented in financial statements.
Hans Hoogervorst, IASB chair, said: ‘We have listened to feedback and made changes to IFRS 17 that will help companies with the implementation of this much-needed standard.’
Alex Bertolotti, global IFRS 17 leader at PwC, said: ‘We welcome the practical benefits that these amendments provide in easing insurers’ implementation of the significant changes brought about by IFRS 17.
‘Insurers can now focus their efforts on refining their implementation projects and deciding how they will use IFRS 17 to tell a clearer and more understandable story about their business.’