The discussion continues on concerns related to transition and scope of IFRS 17

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In transition , PwC US Feb 08, 2019

IASB proposes scope exclusion election for certain loans and transition exception for acquired claim liabilities.

IASB proposes further amendments

On February 7 the IASB continued its discussions on the concerns and implementation challenges arising from IFRS 17 and proposed two further amendments to the Standard to:

  • permit an entity to elect to apply IFRS 9 in its entirety rather than IFRS 17 to contracts for which the only insurance risk in the contract is the settlement of some or all of the obligation created by the contract (e.g. death waivers in loan obligations). However, the discussion did not cover insurance risk embedded in credit cards, which is being separately evaluated and will be discussed at a future meeting. 
  • on transition, under the modified retrospective approach, require an entity to classify a liability that relates to the settlement of claims incurred before an insurance contract was acquired as a liability for incurred claims. This modification would only be permitted to the extent the entity does not have reasonable and supportable information to apply a retrospective approach. For entities applying the fair value approach the Board agreed to propose an amendment that would allow entities to choose classification as a liability for incurred claims. 

The Board agreed to retain the transition requirement that prohibits retrospective application of the risk mitigation option under the variable fee approach. It was noted that permitting retrospective application involved the use of hindsight and could give rise to ‘cherry picking’ opportunities. However, the Board acknowledged that the concerns raised by stakeholders are valid, and welcomed a discussion at a future meeting of alternative solutions to this issue that the staff are currently exploring.

For the remaining transition issues the Board agreed to retain the current requirements.

The Staff plans to bring papers on the remaining implementation concerns and challenges to the March 2019 meeting, along with potential sweep issues. The Board will also at a future meeting consider the package of all the proposed amendments to ensure they comply with the criteria the Board agreed in October 2018 and will consider the need for additional disclosures as a consequence of the proposed amendments. An exposure draft is still expected around the end of June 2019. 

To have a deeper discussion, contact:

Donald Doran

Partner, National Professional Services Group, PwC US


Marie Kling

Partner, National Professional Service Group, PwC US


Mary Saslow

Managing Director, National Professional Service Group, PwC US


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Matt Adams

US Insurance Practice Leader, PwC US

David Schenck

US Insurance Tax Leader , PwC US

Richard de Haan

Global Actuarial Leader, PwC US

Mary Saslow

Managing Director, National Professional Service Group, PwC US

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