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Contractual service margin

The unearned profit component of the insurance contract liability presented in the balance sheet and recognised in the income statement as a company provides services under insurance contracts

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Coverage period

The period during which the insurer provides services under insurance contracts

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Fulfilment cash flows

Estimates of amounts that the insurer expects to collect from premiums and pay out for claims, benefits and expenses, including an adjustment for the timing and risk of those amounts

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Insurance contract

An agreement under which a customer (the policyholder) transfers significant insurance risk to an insurer

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Insurance risk

Risk, other than financial risk, transferred from the policyholder to the insurer (for example, risk of death)

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Investment component

Amounts included in premiums that an insurer returns to its customer in any case, regardless the occurrence of an event

Liability for remaining coverage

Insurer’s obligation to provide insurance contract services

Liability for incurred claims

Insurer’s obligation to pay amounts related to services provided

Portfolio of insurance contracts

Insurance contracts that are subject to similar risks and managed together. Different product lines (for example, annuities and car insurance) are expected to be in different portfolios

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Policyholder

A party that has a right to compensation under an insurance contract if an insured event occurs

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Risk adjustment for non-financial risk

The compensation an insurer requires for bearing the insurance risk

This list of key terms is for educational purposes only. Defined IFRS 17 terms are included in Appendix A of the Standard.

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