IASB issued amendments to IFRS 4

On 12 September 2016, the IASB issued Applying IFRS 9 Financial Instruments with IFRS 4 Insurance Contracts (Amendments to IFRS 4). The amendments address the concerns which result from the implementation of IFRS 9 Financial Instruments (effective date 01.01.2018) before the implementation of the new insurance contracts Standard, whose publication is expected within the next six months as IFRS 17 (effective date no earlier than 2020).

The amendments comprise two optional approaches:

• Overlay approach: Companies that issue insurance contracts may recognise the volatility that could arise when IFRS 9 is applied before the new insurance contracts Standard in OCI, rather than in profit or loss.
• Temporary exemption from applying IFRS 9: Companies whose activities are predominantly connected with insurance may defer the application of IFRS 9 until 2021 and continue to apply IAS 39.

The amendments to IFRS 4 supplement the existing options in the Standard to address the temporary volatility.

This standard is available from the IASB only (www.ifrs.org). (IASB press release, Summary, and further background information under the link)