Following the publication of International Financial Reporting Standard (IFRS) 17 – insurance contracts in the Official Journal of the European Union, Olav Jones, deputy director general of Insurance Europe, said:
“Insurance Europe welcomes the final endorsement of IFRS 17 by the European Commission, which includes an amendment concerning annual cohorts.
“It has taken many years to develop and finalise this important standard. During this process a range of necessary improvements have been incorporated to better reflect the special features of insurance liabilities including their long-term nature, the impact of risk-pooling and mutuality, and the importance of asset liability management
“We are very happy that this European endorsement includes an amendment to the International Accounting Standards Board’s (IASB) version to address the issue of annual cohorts and that it now paves the way for IFRS 17 to be applied in the European Union from 1 January 2023, in line with the timetable of the IASB.
“The issue of annual cohorts has been a fundamental concern for insurers because the IASB’s requirements would have added costs and not adequately reflected the true economic nature of certain insurance products. The amendment included by European policymakers grants European insurers the option to exempt certain contracts (ie those meeting certain criteria relating to mutualisation or cash flow matching) from the annual cohort requirement of IFRS 17. We hope that the IASB will eventually apply this amendment globally for all insurers.”