Given the pervasive nature of IBOR-based contracts, the amendments could affect companies in all industries. Führungsinfo; Teil 4; IFRS 4 Dr. Ruprecht Witzel; FS 11 4 1. IFRS 4 Insurance Contracts applies, with limited exceptions, to all insurance contracts (including reinsurance contracts) that an entity issues and to reinsurance contracts that it holds. IFRS 4 requires to perform liability adequacy test by the Actuary The minimum requirements of test are the following: - The test considers current estimates of … IFRS 4 applies to all insurance contracts (including reinsurance contracts) that an entity issues and to reinsurance contracts that it holds, except for specified contracts covered by other Standards. IFRS 4 Phase II Subject The IASB believe that they are close to finalising IFRS 4 Phase II, accounting for insurance contacts. An entity choosing to apply the overlay approach retrospectively to qualifying financial assets does so when it first applies IFRS 9. Since IFRS 4 was put together in a fairly compact timeframe, just ahead of the EU’s adoption of IFRS Standards, it aimed for minimum rather than maximum harmonisation. 米国、日本等においては、自国基準を保持しながら、自国基準とIFRSとの差異を縮小することによってIFRSと同様な会計基準を採用しようとする「コンバージェンス」が進められてきたが、欧州連合(EU)がEU域内上場企業の連結財務諸表にIFRSの適用を義務付け、域外上場企業にも「IFRS又はこれと同等の会計基準」の適用を義務付けたことを契機に、IFRSを自国の基準として採用する「アドプション」を表明する国が急速に増加し、世界的に「アドプション」ないしは「フル・コンバージェンス」 … No unbundling of investment components for instance for Branch 21 contracts with profit sharing and On 25 June 2020, the IASB issued Extension of the Temporary Exemption from Applying IFRS 9 (Amendments to IFRS 4) thereby deferring the fixed expiry date for the temporary exemption in IFRS 4 from applying IFRS 9 to 1 January 2023. It does not apply to other assets and liabilities of an insurer, such as financial assets and financial liabilities within the scope of IFRS 9. A comprehensive project on insurance contracts is under way. Session expired, please refresh your browser. IFRS 4 is the first guidance from the IASB on accounting for insurance contracts – but not the last. That exemption is broader than in IFRS 6 because IFRS 4 leaves many hyphenated at the specified hyphenation points. On 12 September 2016, the IASB issued amendments to IFRS 4 providing two options for entities that issue insurance contracts within the scope of IFRS 4: An entity choosing to apply the overlay approach retrospectively to qualifying financial assets does so when it first applies IFRS 9. IFRS 4 will be replaced by IFRS 17 as of 1 January 2023. A comprehensive project on insurance contracts is under way. The Board issued IFRS 4 because it saw an urgent need for improved disclosures for insurance contracts, and some improvements to recognition and measurement practices, in time for the adoption of IFRS by listed companies throughout Europe and elsewhere in 2005. 1-2) Scope (paras. In light of the IASB's comprehensive project on insurance contracts, the standard provides a temporary exemption from the requirements of some other IFRSs, including the requirement to consider IAS 8 Accounting Policies, Changes in Accounting Estimates and Errors when selecting accounting policies for insurance contracts. [IFRS 4.4(f)], In 2005, the IASB amended the scope of IAS 39 to include financial guarantee contracts issued. [IFRS 4.24], An insurer need not change its accounting policies for insurance contracts to eliminate excessive prudence. - Duration: 14:58. Please read, International Financial Reporting Standards, comprehensive project on insurance contracts, Insurance contracts — Comprehensive project, IFRS Foundation publishes IFRS Taxonomy update, European Union formally adopts IFRS 4 amendments regarding the temporary exemption from applying IFRS 9, EFRAG publishes draft endorsement advice on IBOR amendments, IASB finalises phase 2 of its IBOR reform project, EFRAG outreach event in the context of the endorsement process of IBOR Phase 2, IASB publishes proposed IFRS Taxonomy update, EFRAG endorsement status report 16 December 2020, A Closer Look — Financial instrument disclosures when applying Interest Rate Benchmark Reform – Phase 1 amendments to IFRS 9 and IAS 39 and Phase 2 amendments to IFRS 9, IAS 39, IFRS 4 and IFRS 16, EFRAG endorsement status report 6 November 2020, EFRAG endorsement status report 14 September 2020, Effective date of IBOR reform Phase 2 amendments, Different effective dates of IFRS 9 and the new insurance contracts standard, IAS 39/IFRS 4 – Financial guarantee contracts and credit insurance, IBOR reform and the effects on financial reporting — Phase 2, Comprehensive insurance contracts project carried over from IASC to new IASB, Short-term insurance contracts project split off from comprehensive project, Effective for annual periods beginning on or after 1 January 2005, Effective for annual periods beginning on or after 1 January 2006. non prescriptive, merely giving examples. Finanz. [IFRS 4.45]. requires an insurer to keep insurance liabilities in its balance sheet until they are discharged or cancelled, or expire, and prohibits offsetting insurance liabilities against related reinsurance assets and income or expense from reinsurance contracts against the expense or income from the related insurance contract. [IFRS 4.27], When an insurer changes its accounting policies for insurance liabilities, it may reclassify some or all financial assets as 'at fair value through profit or loss'. I also wrote this article for you to give you a few IFRS 15 examples and hints – all with the purpose to warn you. measuring insurance liabilities on an undiscounted basis, measuring contractual rights to future investment management fees at an amount that exceeds their fair value as implied by a comparison with current market-based fees for similar services. The board recognizes that 3 ½ to 4 years is a long implementation period. The Board issued IFRS 4 because it saw an urgent need for improved disclosures for insurance contracts, and some improvements to recognition and measurement practices, in time for the adoption of IFRS by listed companies throughout Europe and elsewhere in 2005. © IFRS Foundation 2017. You can view which cookies are used by viewing the details in our privacy policy. IFRS 17: Insurance Contracts Introduction (IN1-IN8) Objective (paras. What general insurers need to do now, and why. information about insurance risk (both before and after risk mitigation by reinsurance), including information about: actual claims compared with previous estimates, the information about credit risk, liquidity risk and market risk that IFRS 7 would require if the insurance contracts were within the scope of IFRS 7. information about exposures to market risk arising from embedded derivatives contained in a host insurance contract if the insurer is not required to, and does not, measure the embedded derivatives at fair value. 3 Updated September 2019 A closer look at IFRS 15, the revenue recognition standard While entities have adopted the standards, application issues may continue to arise. an option that permits entities to reclassify, from profit or loss to other comprehensive income, some of the income or expenses arising from designated financial assets; this is the so-called overlay approach; an optional temporary exemption from applying IFRS 9 for entities whose predominant activity is issuing contracts within the scope of IFRS 4; this is the so-called deferral approach. Once entered, they are only IFRS 4 exempts an insurer from applying those criteria to its accounting policies for: a. insurance contracts that it issues (including related acquisition costs and related intangible assets, such as those described in paragraph 31 The amendments require insurers who apply the temporary exemption from IFRS 9 to apply the amendments in IFRS 9 in accounting for modifications directly required by the IBOR reform, they are effective for annual periods beginning on or after 1 January 2021. Presentation and disclosure 370 4 [IFRS 4.3] Furthermore, it does not address accounting by policyholders. Page 1 of 6 IFRS 9 EXAMPLES AND EXERCISES Acknowledgement This material is based on IFRS 9 (published by IASB) and Get ready for IFRS 9 (published by Grant Thornton) Required For Examples 1 … 5-8) Identifying a lease (paragraphs B9-B33) (paras. zInsurer decides the level of detail it needs to give in order to satisfy the the disclosure requirements. Recognition and measurement 368 3. IFRS 4 was issued in March 2004 and applies to annual periods beginning on or after 1 January 2005. IFRS 16: Leases Introduction (IN1-IN15) Objective (paras. IFRS 4 for beginners: Everything you ever wanted to know but were afraid to ask Simon Sheaf & Simon Yeung 05/09/2012 2 Agenda 1. [IFRS 4.Appendix A], The IFRS exempts an insurer temporarily (until completion of Phase II of the Insurance Project) from some requirements of other IFRSs, including the requirement to consider IAS 8 Accounting Policies, Changes in Accounting Estimates and Errors in selecting accounting policies for insurance contracts. clarifies that an insurer need not account for an embedded derivative separately at fair value if the embedded derivative meets the definition of an insurance contract [IFRS 4.7-8], requires an insurer to unbundle (that is, to account separately for) deposit components of some insurance contracts, to avoid the omission of assets and liabilities from its balance sheet [IFRS 4.10], clarifies the applicability of the practice sometimes known as 'shadow accounting' [IFRS 4.30], permits an expanded presentation for insurance contracts acquired in a business combination or portfolio transfer [IFRS 4.31-33], addresses limited aspects of discretionary participation features contained in insurance contracts or financial instruments. 1-2) Scope (paras. Accordingly, the views we express in this publication may However, Fitch cannot rule out the possibility that the additional disclosure and information contained in the accounts could lead to rating changes due to an improved perception of risk based on the enhanced information available." IFRS 4.BC252, 260–263 The temporary exemption is applied at the reporting entity level – i.e. 3-4) Recognition exemptions (paragraphs B3-B8) (paras. The standard was published in March 2004 and is effective from 1 January 2005. Introduction and scope 367 2. Alpha Leaders Productions Recommended for you