IASB issues IFRS 17 and finalises the remaining of the four major projects

Following finalisation of IFRS 9 Financial Instruments (2014), IFRS 15 Revenue from Contracts with Customers (2015) and IFRS 16 Leases (2016), the IASB today issued IFRS 17 Insurance Contracts, the last remaining of the four major projects. This draws to an end a 20-year development period that has seen five consultation papers, an interim standard (IFRS 4) as well as numerous outreach activities.

IFRS 17 represents the first global standard for the accounting for insurance contracts. The predecessor standard, which was issued in 2004 and always deemed an interim solution, allowed insurers to see previous accounting policies developed under national GAAP largely being grandfathered when transitioning to IFRS. The new standard, coming into effect on 1 January 2021 and superseding IFRS 4, will mandate a current value measurement for insurance obligations and prohibit using legacy historical cost.

Commenting on the issuance of the standard the ASCG’s President, Prof Dr Andreas Barckow, said: “The issuance of the insurance contracts standard marks the successful finalisation of the major projects that the IASB had undertaken following its reorganisation at the beginning of the millennium. Since its inception, the ASCG has constantly followed the project’s course and has contributed to the discussions and successfully achieved changes. At this point, I would like to express my heartfelt gratitude to all previous and existing members of our insurance working group. Without their constant support we would not have been able to yield our achievements. The ASCG is fully committed to and will remain actively engaged in the implementation phase of IFRS 17. We are in a continuous exchange with the German Insurance Association and will closely follow the implementation, both through our working group and our well-established channels to the IASB and will make ourselves heard.”

With a view to the endorsement procedure in the European Union and by reference to his other role as Vice President of the EFRAG Board, Mr Barckow said: “For the EU, 18 May marks the official beginning of our endorsement work. The endorsement advice will be a huge challenge for EFRAG since the starting point is different for each and every insurer due to the grandfathering of national GAAP IFRS 4 brought about, thus making any cost benefit analysis difficult. I call on all participants for a constructive contribution to this process and for working together in achieving a swift endorsement of the standard, so that Europe remains a member of the IFRS family.”

The IASB plans to help entities with the implementation through a number of initiatives, including comprehensive learning material, webinars and brochures. Moreover, the standard setter today announced the creation of a transition resource group (TRG) and now calls for nominations. The primary focus is on preparers and auditors who will deliberate and share their views on any implementation issues brought before the group. The ASCG is highly supportive of such a TRG and will be taking up the TRG’s issues and make them known to its wider German constituency. Furthermore, we intend to increase our exchanges with entities having to implement the standard and seek to support them as much as possible.

Further information:

• Project page on the IASB’s website containing comprehensive background information
• IASB’s call for nominations for TRG membership