This free, guided checker walks your finance team through the key decision points for IFRS 17 Insurance Contracts Recognition. Answer a few questions to see the likely treatment and the evidence to document.
Answer a few quick questions below. It is private - nothing is submitted or stored - and takes about a minute.
This tool is a high-level IFRS screening aid for general information only and is not accounting, audit or legal advice. Conclusions require entity-specific evidence and judgement - confirm the treatment with your advisor.
Here is what the checker asks and why each step matters. Prefer to talk it through? Contact us and we will help directly.
IFRS 17 applies to insurance and reinsurance contracts issued and reinsurance contracts held unless scope exclusions in IFRS 17.3 apply.
Apply IFRS 9, IFRS 15, or another applicable standard; the arrangement is outside IFRS 17 scope (IFRS 17.3; IFRS 17.7).
Official guidance: IFRS issued standards
Embedded derivatives and distinct investment components that meet separation criteria are accounted for under IFRS 9 rather than IFRS 17 under IFRS 17.11 and IFRS 17.17.
Complete the separation assessment: embedded derivatives and distinct investment components under IFRS 17.11, and distinct goods or non-insurance services under IFRS 17.12.
Official guidance: IFRS issued standards
Contracts are grouped into portfolios and further into groups that will not include contracts issued more than one year apart under IFRS 17.14 and IFRS 17.22.
Define portfolios, profitability groups, and annual cohorts before recognition; the level of aggregation is set at initial recognition and not revisited (IFRS 17.14-24).
Official guidance: IFRS issued standards
The general measurement model applies by default; the premium allocation approach and variable fee approach are permitted when eligibility criteria in IFRS 17.53 and IFRS 17.45 are met.
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Official guidance: IFRS issued standards
PAA is permitted for contracts with coverage period one year or less or when GMM would not materially differ; VFA applies when contracts have direct participation features under IFRS 17.45 and IFRS 17.53.
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Official guidance: IFRS issued standards
Fulfilment cash flows comprise estimates of future cash inflows and outflows adjusted for time value of money and financial risk under IFRS 17.33 and IFRS 17.36.
Build the fulfilment cash flow model - probability-weighted current estimates within the contract boundary (IFRS 17.33-34) discounted per IFRS 17.36 - before measurement.
Official guidance: IFRS issued standards
For profitable groups under GMM, CSM is the residual that prevents initial recognition gain and is released to profit or loss as services are provided under IFRS 17.38 and IFRS 17.44.
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Official guidance: IFRS issued standards
When a group of contracts is onerous at initial recognition or becomes onerous subsequently, a loss is recognized immediately in profit or loss under IFRS 17.47 and IFRS 17.48.
Recognize the loss component for onerous groups: an immediate loss in profit or loss and a loss component of the liability for remaining coverage (IFRS 17.47-49).
Official guidance: IFRS issued standards
Under the VFA, the CSM is adjusted for the entity's share of the change in fair value of the underlying items and for changes in fulfilment cash flows relating to future service (IFRS 17.45). Eligibility rests on the direct participation conditions in IFRS 17.B101, assessed at inception and not reassessed unless the contract is modified (IFRS 17.B102).
Apply the VFA CSM mechanics before concluding: adjust the CSM for the entity's share of underlying-item fair value changes and for future-service fulfilment cash flow changes (IFRS 17.45).
Official guidance: IFRS issued standards
Under the PAA the liability for remaining coverage includes insurance acquisition cash flows unless the entity elects to expense them as incurred, an election available only when each contract's coverage period is one year or less (IFRS 17.59(a)). The choice affects the timing of insurance revenue and expenses but not the total profit of the group.
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Official guidance: IFRS issued standards
The risk adjustment compensates for uncertainty about amount and timing of cash flows arising from non-financial risk under IFRS 17.37.
Quantify and include the risk adjustment for non-financial risk in fulfilment cash flows (IFRS 17.37); no technique is prescribed, but the resulting confidence level must be disclosed (IFRS 17.119).
Official guidance: IFRS issued standards
The disclosure objective is to give users a basis to assess the effect of insurance contracts on financial position, performance, and cash flows (IFRS 17.93). Prepare reconciliations of the liability for remaining coverage, the loss component, and incurred claims (IFRS 17.100), plus CSM and risk-adjustment roll-forwards for groups outside the PAA (IFRS 17.101).
IFRS 17 recognition and measurement are complete, with the required balance reconciliations and judgment disclosures (IFRS 17.98-109; IFRS 17.117-120). Complete the IFRS 17 note: balance reconciliations (IFRS 17.100), CSM and loss-component roll-forwards (IFRS 17.101), and judgment and confidence-level disclosures (IFRS 17.117-119).
Official guidance: IFRS issued standards
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