The International Accounting Standards Board (IASB) is going to consult on measures that need to temporarily be put into place to cover issues in the insurance industry surrounding the introduction of IFRS 9 Financial Instruments.
The new insurance contracts standard will involve significant changes, and the independent standard-setting body of the IFRS Foundation will provide a transparent process in the run up to its application in regard to the new financial instruments standard.
Meetings of the IASB are held in public and webcast as part of an open and transparent process. The capacity for public comment is an important component of its consultations.
The new move follows the introduction of IFRS 9 Financial Instruments last July, which have an effective date of 1st January 2018. At the time of the introduction, the IASB said that it would consider any potential challenges that might arise if IFRS 9 were to be implemented before the new insurance contracts standard.
IFRS 4 Insurance Contracts
Companies whose business models are mainly based on issuing insurance contracts will have the option to defer the effective date of IFRS 9 until 2021. This so called ‘deferral approach' is the latest confirmed measure made to amend IFRS 4 Insurance Contracts.
The ‘overlay approach' means insurers who implement IFRS 9 have the option to remove from profit or loss some of the accounting mismatches, as well as any temporary volatility before the new insurance contracts standard is actually implemented.
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