IFRS 17-Insurance Contracts Key Topics

Summary:

SW India Global Shared Services (GSS) has summarized some of the key topics related to IFRS 17 for ease
of reference for application of reporting standard: –

Risk adjustment for non-financial risk: –

The estimate of the present value of the future cash flows is adjusted to reflect the compensation that the entity requires for bearing the uncertainty about the amount and timing of future cash flows that arises from non-financial risk Refer IFRS 17:37.

Contractual Service Margin: –

The CSM represents the unearned profit of the group of insurance contracts that the entity will recognize as it provides service in the future. This is measured on initial recognition of a group of insurance contracts at an amount that, unless the group of contracts is onerous, results in no income or expenses arising from, Refer IFRS 17:33: –

• The initial recognition of an amount for the FCF
• The derecognition at that date of any asset or liability recognized for insurance acquisition cash flows, and
• Any cash flows arising from the contracts in the group at that date

Subsequent measurement: –

On Subsequent measurement, the carrying amount of a group of insurance contracts at the end of each reporting period shall be sum of, Refer IFRS 17:40: –

• The liability for remaining coverage comprising: –
  • The FCF relates to future services, and
  • The CSM of the group at that date,
• The liability for incurred claims, comprising the FCF related to past service allocated to the group at that date.

How can we help

Implementation of IFRS 17 is as complex as it appears from above. With SW India GSS, you can work with
professionals who understand all facts related to IFRS 17 and linked complexities as well. We are ready to
apply of knowledge and industry experience to develop a seamless execution strategy for your business needs.

SW India GSS Team