• Industry: Financial Services, Insurance
  • Type: Business and industry issue, KPMG information
  • Date: 01/08/2014

Accounting for financial instruments is changing 

How could your business be affected?

Now that the IASB has published a completed standard on financial instruments accounting – IFRS 9 Financial Instruments (2014) – the real work for insurance companies is just beginning. The new standard includes revised guidance on the classification and measurement of financial assets, including a new expected credit loss model for calculating impairment, and supplements the new general hedge accounting requirements published in 2013.

Accounting for financial instruments is changing
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Insurers can expect a sea-change in financial reporting over the next few years as they plan for adoption of new standards on both financial instruments and insurance contracts. Before insurers reach any conclusions about how they apply IFRS 9, they will want to consider its interaction with the forthcoming insurance contracts standard.


Although the permissible measurement bases for financial assets – amortised cost, fair value through other comprehensive income (FVOCI) and fair value through profit or loss (FVTPL) – are similar to IAS 39 Financial Instruments: Recognition and Measurement, the criteria for classification into the appropriate measurement category are significantly different. IFRS 9 also replaces the ‘incurred loss’ model in IAS 39 with an ‘expected credit loss’ approach.


IFRS 9 will take effect from 1 January 2018, but preparers can choose to apply it earlier.  Download our PDF (left) to find out more.


Insurance contacts

liam lynch, partner

Liam Lynch

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Partner & Head of Insurance

+353 1 410 1734

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hubert crehan, partner

Hubert Crehan

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Partner & Head of Financial Services Audit

+353 1 410 2629

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