IASB proposes amendments to the current Insurance Contracts Standard to provide temporary reliefs for insurers

 09 December 2015

The International Accounting Standards Board (the Board) has today published for public comment proposals to amend the existing insurance contracts Standard, IFRS 4.  This is to address the temporary consequences of the different effective dates of IFRS 9 Financial Instruments and the new insurance contracts Standard.

Both IFRS 9 (which was issued in July 2014 and has an effective date of 1 January 2018) and the new Insurance Contracts Standard (which will replace IFRS 4 and have a later effective date) are relevant to companies that issue insurance contracts.  Some of those companies have expressed concerns about the need to implement two significant changes in accounting on different dates. They have also highlighted that potential increased accounting volatility could arise in profit or loss if the new requirements for financial instruments were to be applied before the new requirements for insurance contracts.

In order to balance meeting the needs of those stakeholders with the needs of users of financial statements, the Board has proposed the following amendments to IFRS 4. These proposals supplement existing options within IFRS 4 that could be used to address any accounting volatility that may arise: 

Hans Hoogervorst, IASB Chairman, commented:

The IASB is in the final stages of developing the new Insurance Contracts Standard. Until it is in place, we believe the proposed changes balance meeting the needs of insurers with meeting the needs of users of financial statements.

A ‘Snapshot’ explaining the two proposed amendments in more detail, can be accessed here.

The deadline for comments on the Exposure Draft is 8 February 2016.