The International Accounting Standards Board (IASB) will propose temporary measures to address concerns about issues insurance companies are facing with implementation of the new financial instruments standard.
IFRS 9, Financial Instruments, was issued in July 2014 and takes effect on January 1st 2018. The IASB confirmed Wednesday that it will propose amending IFRS 4, Insurance Contracts, to give companies whose business model is to predominantly issue insurance contracts an option to defer the effective date of IFRS 9 until 2021.
The board also will propose giving insurers that implement IFRS 9 the option – which would be called the “overlay approach” – to remove from profit or loss some of the accounting mismatches and temporary volatility that could occur before the new insurance contracts standard is implemented. The IASB is deliberating on the insurance contracts standard, which is expected to be issued next year.
Later this year, the IASB will publish an exposure draft seeking public comment on these measures. Companies that do not issue insurance contracts would not be affected by these measures.
—Ken Tysiac (ktysiac@aicpa.org) is a CGMA Magazine editorial director.