IFRS

Proposed amendment to IFRS 17 Insurance Contracts

In the October 2021 meeting, the IASB deliberated on the proposed amendment aiming at companies to improve usefulness of the comparative information presented on initial application of IFRS17 and IFRS 9. This article is part of our IFRS technical updates newsletter.
Contents

This amendment relates to financial assets relating to insurance contract liabilities for which comparative information presented on initial application of IFRS 17 and IFRS 9 has not been restated for IFRS 9. An entity can apply a classification overlay approach which is intended to achieve classification outcomes more consistent with what they would have been under IFRS 9.

In the comparative periods presented on initial application of IFRS 17 and IFRS 9, application of the amendment would be optional.

  • If an entity applies the classification overlay, it must disclose this application.
  • An entity has an option of applying the classification overlay on an instrument-by-instrument basis so as to avoid accounting mismatches and achieve better consistency in financial statements when applying IFRS 17 and IFRS 9 for the first time. There is no requirement to separately identify the financial assets to which the optional classification overlay has been applied to.
  • When an entity applies IFRS 17, only then can it avail this amendment. When applying the classification overlay, the entity does not need to apply the impairment requirement of IFRS 9.

Narrow scope amendment is expected by the end of 2021.

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