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IFRS 17 Insurance Contracts - Part 1
When I started my career in Accounting Advisory, I had a misconception that I was meant to know everything in each Accounting Standard because most of my client engagements often requires the knowledge of IFRS.
But the same misconception is true with lawyers. How do I know this? The best ones may not know everything in the law but they know how to find the law (except you are Mike, Harvey Spectre's famous protégé in the TV series - Suits).
This first part of the IFRS 17 series will introduce you to some basic things that you need to know about the standard.
What is the effective date of IFRS 17?
IFRS 17 will become effective from 1 January 2023 and there are a lot of knowledge gaps to fill. It doesn't matter whether you want to specialize in insurance, my accounting advisory guys will tell you that all Standards are interconnected.
You may only need to know the basics and then with time, learn where to find the technical bits as the need arises.
Who are the entities that can apply IFRS 17?
So I raised a poll on IFRS is easy's LinkedIn page and here is the result.
|Note that the results here are not necessarily correct. Please continue reading for the correct answer.|
IFRS 17 requires all companies that issue insurance contracts to apply the Standard. Policyholders obviously don't issue insurance contracts, so they are not to use IFRS 17 in accounting for the premiums they pay. Except if the policyholder is an insurance company that has ceded (transferred) a policy to a reinsurance company.
This means IFRS 17 is applied to insurance contracts issued (by the insurer), reinsurance contracts held (by the cedent), and reinsurance contracts issued (by the reinsurer).
Yes! You made it to the end.
I will be happy to receive any questions you may have about the topic discussed in this blog post.
Share in the comment section about the misconceptions you once had about IFRS 17.