Overview

Insurance companies need to 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.

IFRS17 standards, released in May 2017, supersede the current reporting standards 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 on 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 will give investors and analysts more confidence in understanding the insurance industry.
• Introduces consistent accounting for all insurance contracts based on a Current Measurement Model.