1. Release Notes
  2. About the Guide
  3. Introduction to Oracle Insurance Accounting Analyzer Application Pack

1.4 Introduction to Oracle Insurance Accounting Analyzer Application Pack

IFRS 17 and LDTI are new accounting standards that supersede the current existing practice. The new standards provide the users of financial statements with a new perspective on the financial accounts of insurance companies.

Insurance companies must identify the risks that arise from the insurance contracts along with the calculation of assets and liabilities. IFRS 4 was introduced in March 2004 and was intended to provide limited improvements to accounting for insurance contracts. IFRS 4 permitted companies to continue previous accounting practices for insurance contracts but did enhance the disclosure requirements.

IFRS 17 standards, released in May 2017, supersede the current reporting standards in IFRS 4 on accounting for insurance contracts and have an effective date of 1 January 2021. The new standards provide users of financial statements with a new perspective of the financial accounts of insurance companies. IFRS 17 introduces an approach that tackles some challenges in accounting for insurance contracts currently addressed inconsistently when a company applies IFRS 4.

  • IFRS 17 provides updated information about the obligations, risks, and performance of insurance contracts.
  • Increases transparency in financial information reported by insurance companies, which gives investors and analysts more confidence in understanding the insurance industry.
  • Introduces consistent accounting for all insurance contracts based on a current Measurement Model.

Amendments in LDTI apply to all insurance entities that issue long-duration contracts and emphasize the following:

  • Improves the timeliness of recognizing changes in the liability for future policy benefits and modifies the rate used to discount future Cash Flows.
  • Simplifies and improves the accounting for certain market-based options or guarantees associated with deposit (or account balance) contracts.
  • Simplify the Amortization of deferred acquisition costs.
  • Improve the effectiveness of the required disclosures.