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.