“The European Insurance industry continues to support IFRS international accounting standards and the role they play in supporting international comparability among insurers and a global level playing field.
We regret that the IASB has decided not to address the concerns raised on the annual cohorts issue.
This remains a fundamental concern for the majority of our members because it means for their companies that:
- IFRS 17 will not adequately reflect the true economic nature of insurance contracts with risk sharing between generations and contracts that are cashflow-matched over different generations (together referred to as ‘mutualisation’).
- Failure to address this issue will reduce the usefulness and relevance of the reporting information and increase the costs of compliance with reporting.
The CFO Forum, the French standard setter and the Spanish standard setter have provided potential solutions and we are convinced that these can be used as the basis to create appropriate mechanisms to identify the contracts where annual cohorts should not be required.
Therefore, the majority of our members, given the IASB’s decision not to address the annual cohorts issue and its significant impact on insurers, support a European carve-in or carve-out to ensure a solution to the annual cohort issue is applied for European insurers. Other members see the need to endorse IFRS 17 as-is to preserve the global nature of the standard and concerns about potential operational implications.
Against this background, any such carve-in/carve-outs should not impact the effective date of 1 January 2023.”