KPMG has published an analysis of the International Accounting Standards Board (IASB)’s proposed amendments to IFRS 17.
The report, entitled ‘Insurance contracts: new on the horizon’, addresses the seven key areas focused on in the amendments, as well as the proposition of a one year referral of IFRS 17’s effective date to 1 January 2022.
KPMG identified that changes to the scope of credit cards and loans that provider insurance coverage will reduce implementation costs to issuers and lenders, while modifications to the profit recognition pattern for both insurance coverage and investment services would create “better align[ment]”.
Concerning the allocation of insurance acquisition cash flows, IASB proposed that this would be required to be partially given to expected contract renewals by insurers to mitigate inconvenience.
IASB also proposed an amendment to transition requirements for claims liabilities on transition, which, according to KPMG, would provide “practical relief”, along with changes to the presentation of assets and liabilities within insurance contracts.
Furthermore, the IASB’s proposed expansion of risk mitigation for direct participating contracts, and the reinsurance of “onerous” contracts to consider proportionate reinsurance contracts would reduce “accounting mismatches”.
Mary Trussell, global lead, insurance accounting change, KPMG, commented: “With IASB having published its proposed amendments to IFRS 17, we now have a complete picture of what the final standard will look like.”
She continued: “For any insurers experiencing project fatigue, the proposed amendments are a wake-up call to assess their progress and reinvigorate their implementation of IFRS 17. For those that have yet to make meaningful progress, consider it the starting gun for a marathon.”
