IFRS 17 fundamentally rewrites the accounting rules for insurance contracts set out in IFRS 4 ‘Insurance Contracts’. IFRS 4 was an interim accounting standard, primarily focused on enhancing disclosure, that was designed by the IASB to allow entities issuing insurance contracts to carry on accounting for them using policies that had been developed under their legacy accounting standards.

The multitude of different approaches that presently exist under IFRS will cease when IFRS 17 comes into effect. Although the definition of an insurance contract remains largely unchanged in the replacement Standard, significant changes to the measurement, classification and disclosure of insurance contracts are required.

With IFRS 17’s anticipated mandatory effective date of 1 January 2022 moving ever closer, all types of businesses, and not just registered insurance businesses, need to start evaluating the impact of the new Standard now.