The International Accounting Standards Board (IASB) has today confirmed that it will consult on a package of temporary measures to address concerns about issues arising from implementing the financial instruments Standard before the new insurance contracts Standard comes into effect.
The financial instruments Standard, IFRS 9 Financial Instruments, was issued in July last year and has an effective date of 1 January 2018. At that time, the IASB said it would consider potential challenges arising if IFRS 9 is implemented before the new insurance contracts Standard.
The measures confirmed today would amend IFRS 4 Insurance Contracts to give companies whose business model is to predominantly issue insurance contracts the option to defer the effective date of IFRS 9 until 2021 (the ‘deferral approach’). It would also give insurers who implement IFRS 9 the option to remove from profit or loss some of the accounting mismatches and temporary volatility that could occur before the new insurance contracts Standard is implemented (the ‘overlay approach’).
The insurance contracts Standard is currently being deliberated by the IASB and a final Standard is expected to be issued in 2016.
An Exposure Draft setting out these measures will be published later this year for public consultation. If confirmed after the public consultation, these measures will not affect companies that do not issue insurance contracts.
