Updated: Sep 28, 2022
The IASB has been monitoring the implementation of IFRS 17 Insurance Contracts since it was announced in May 2017.
IFRS 17 is one of the largest accounting changes in insurance in the last decade, impacting insurance firms’ entire operating model.
During the meeting in October 2018, the Board came up with a list of 25 potential changes that may be made to the standard. They also agreed on the criteria used to evaluate any possible changes.
The IASB revised its recommendations and included further comments provided by constituents, which ultimately led to the adoption of the final amendments to IFRS 17 and Extension of the Temporary Exemption from Applying IFRS 9 (Amendments to IFRS 4) on June 25, 2020.
MFRS 17 Insurance Contracts
MFRS 17 (which has requirements identical to IFRS 17 Insurance Contracts) supersedes MFRS 4 for reporting periods beginning on or after 1 January 2021.
Amendments to MFRS 17 also defer the effective date of MFRS 17 by two years, to annual reporting periods beginning on or after 1 January 2023.
And of course, the decision to defer the effective date will enable entities to implement the new Standard in a timely manner which MASB considers to be beneficial for investors, preparers and other stakeholders.
It is a "narrow-scope amendment," and the purpose of the amendment is to make comparative information more useful for investors on the initial application of MFRS 17.
MFRS 17 sets out the principles for the recognition, measurement, presentation and disclosures of insurance contracts while improving comparability and transparency. It fundamentally changes the way in which insurers measure and account for insurance contracts.
Nonetheless, the present version of MFRS 17 allows for a diverse range of techniques to be utilised when accounting for insurance contracts.
MFRS 17 will bring about substantial changes to the accounting practises of all entities that issue insurance contracts and investment contracts with discretionary participation characteristics.
All entities, even those that are not insurers, will be required to assess whether or not they have any contracts that meet the definition of insurance contracts and, as a result, could be affected by the future adoption of MFRS 17.