IFRS 17: amendments to accounting insurance standard problematic

Recent tweaks to IFRS 17 Insurance Contracts have provided some much needed clarity, but there is still room for interpretation and a financial hit when insurance companies first adopt the accounting standard in 2023, warn Michael Winkler and Sunil Kansal FCA of Shasat Consulting

Besides moving the effective date of IFRS 17 Insurance Contracts to January 2023, the International Accounting Standards Board (IASB) has also decided on various amendments to the standard, establishing clarity for further implementation.

However, IFRS 17 remains challenging: although the IASB has addressed some of the concerns of the business, it has also pushed back on other change requests.

Contractual Service Margins (CSM)

The profit arising from CSM releases is based on ‘coverage units’, reflecting the quantity of provided coverage as well as the duration of the contracts. The standard is not very specific on the definition of these coverage units; however, they seem to be related to insurance coverage only.

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