IFRS 17 Taskforce Update - March 2018

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This article reports on the new AASB 17 Insurance Contracts Information Note, released on 8 March 2018, to support actuaries in Australia and NZ in the application of IFRS17.

The Institute released the new AASB 17 Insurance Contracts Information Note (AASB17 IN) on Thursday, 8 March 2018. AASB 17 IN produced by the IFRS17 Taskforce was released as a draft for discussion.

The IFRS17 taskforce was established in December 2016 with a core focus to produce an IN to help actuaries in Australia and NZ. The main purpose of this IN is to support its members in the application of IFRS17, ensure consistency in the interpretation of the Standard where possible at this time, identify issues in the Standard that affect the actuarial profession in Australia, and represent its members to ensure the relevant and significant issues are escalated to the right local and global forums.

The taskforce is chaired by Ian Laughlin and its core membership includes representative from General Insurance, Life Insurance and Health insurance practice areas. Members from the big four accounting firms, New Zealand Society of Actuaries, Australian Prudential Regulation Authority (APRA), the Accountant and Actuaries Liaison Committee (AALC), and the Australian Accounting Standards Board (AASB), Transition Resource Group (TRG). A full membership list of who is involved in the development of this IN is illustrated in the table below.

Member engagement and feedback

The AASB17 V1.0 is exposed to members for feedback. The feedback closing date is 28th of March 2018. Exposure draft, Explanatory Memorandum and some examples can be found here. Please provide feedback and comments to Tony Burke at Tony.burke@actuaries.asn.au.

The Taskforce has organised a workshop in Sydney on the 3rd of April where interested members will have a chance to ask questions, provide their inputs for further improvement of the IN. If you are interested in attending the workshop, please register here.

The Institute has also set up a webinar for members who are in other States and internationally.

AASB 17 Information Note structure

The AASB 17 IN is structured as a series of questions and answers (Q&A), in some cases, with a few simple examples for illustration. A limited but more detailed set of examples in Excel is available on the Institute website here. The IASB also has published IFRS 17 Illustrative Examples.

We recognise that there is ongoing dialogue at the global level on a number of topics, and we expect that the IN will need to be updated over time for this.

The Institute would like to thank and congratulate the IFRS17 Taskforce for their dedication and commitment to get the first AASB17 IN finalised. The Taskforce, chaired by Ian Laughlin, and supported by many volunteers, has put in countless hours and enormous commitment to get the first draft finalised. The Institute is very appreciative of the incredible amount of work done by this Taskforce.

Main Taskforce members and Coordinators with third parties and other professional bodies
 (APRA, ATO, AALC, AASB, IAA, the analyst community etc.)

 

  • Ian Laughlin (Taskforce Chair, Australian Prudential Regulation Authority (APRA), Australian Taxation office (ATO), Australian Securities & Investments Commission (ASIC) and Treasury),
  • Hoa Bui (Financial Services Council (FSC), Council and Cross Practice Committee)
  • Grant Robinson, Brett Pickett (Life Insurance & Wealth Management Practice Committee (LIWMPC) representative),
  • Francis Beens (Insurance Council of Australia (ICA) and General Insurance Practice Committee Representative),
  • Brendan Counsell (International Actuarial Association (IAA) and the Accounting & Actuaries Liaison Committee AALC),
  • Trang Duncanson (Analyst Community and Actuaries Institute Communication Lead),
  • Anne Driver through Benoit Laganiere (Australian Accounting Standards Board (AASB);
  • Andrew Scott (Reserve Bank of NZ),
  • Ben Coulter (Reserve Bank of NZ and New Zealand Society of Actuaries), 
  • Antony Claughton (Health Practice Committee (HPC) representative),
  • David Rush (Australian Securities and Investments Commission (ASIC)
  • Lisa Simpson
  • Martin Stollwitzer
  • Jun Oh (Australian Prudential and Regulation Authority (APRA)

 

Technical Work-streams

Coverage within work-stream

Taskforce Lead & Members

 

General Model/ building block approach (BBA)

  • Onerous contracts
  • Current estimates (initial recognition and subsequent measurement)
  • Contract Service Margin (CSM) - initial recognition and subsequent measurement
  • Reinsurance 
  • Contract modification /derecognition
  • Grant Robinson (BBA Lead)
  • Andrew Scott
  • Anna Byrne
  • Antony Claughton
  • Bob Buchanan
  • Brad Oldridge
  • Brett Pickett
  • Charl Jansen van Rensburg
  • Chris Scheuber
  • Dimity Gartizionis
  • Julian Braganza
  • Mari-Liz Hill
  • Michael Chae
  • Stuart Mainland

Variable fee approach (VFA)

  • Eligibility for the VFA, and composition of the pool of underlying items
  • Treatment of participating contracts not eligible to use the VFA
  • Unit Linked with Insurance Riders in the same contract
  • Groupings that are required under the VFA (consideration of mutualisation)
  • Issues specific to the VFA relating to the Risk Adjustment, amortisation of the CSM, options under the contract, reinsurance, expenses and taxation
  • Issues specific to the use of the VFA by friendly societies
  •  The treatment of asymmetry
  • The calculation of VFA starting amounts on transition
  • David Rush (VFA Lead)
  • Alison Nanson
  • David Liney
  • Grant Robinson
  • Jamie Kernot
  • Peter Corbett
  • Peter Erlandsen
  • Ray Bennett
  • Richard Land
  • Ross Culey

 

Premium allocation approach (PAA)

  • Eligibility for the PAA
  • Liability for remaining coverage
  • Liability for incurred claims
  • Onerous contracts under PAA
  • Significant financing requirement
  • Issues specific to the PAA relating to reinsurance and expense acquisition costs
  • The calculation of PAA starting amounts on transition
  • Brendan Counsell (Workstream Lead)
  • Bob Buchanan
  • Chris Scheuber
  • Trang Duncanson
  • Brett Pickett
  • Antony Claughton
  • Evelyn Njoo
  • Nick Stolk
  • Philip Halverson
  • Ryan Druitt
  • Dean Hammond

Risk adjustments, discount rates

  • Determining the discount rates and allowance for financial risk
  • Determining the risk adjustment
  • Brett Pickett (RADR Workstream Lead)
  • Ben Coulter 
  • Bob Buchanan
  • Bolin Li 
  • Brad Oldridge
  • Brett Pickett
  • Danny Bechara
  • Lisa Simpson
  • Martin Stollwitzer
  • Michael Dermody
  • Nicholas Stolk
  • Ray Bennett
  • Stuart Mainland
  • Wayne Cannon 

Level of aggregation, definition of portfolios and groupings

  • Defining insurance contract portfolios and boundaries
  • Dividing portfolios into groupings (onerous, no significant chance of becoming onerous, other, year of issue)
  • Issues specific to the level of aggregation and boundaries relating to reinsurance 
  • The level of aggregation on transition
  • Benoit Laganiere (Workstream Lead)
  • Mari-Lize Hill
  • Ben Coulter
  • Trang Duncanson
  • Chris Dolman
  • Chris Marston-Fergusson
  • Melissa S Yan
  • Michael Ramsay
  • Moy Yin Chow Fat Lun
  • Raewin Davies  
  • Scott Reeves
  • Thomas McCutcheon

Disclosures, OCI and strategic

  • Other Comprehensive Income (OCI)
  • Disclosures / presentation
  • Strategic transition (e.g. tax and APRA).
  • Hoa Bui (Workstream Lead)
  • Briallen Cummings
  • Brett Pickett
  • Bob Buchanan
  • Francis Beens
  • Grant Robinson
  • Shweta Krishna
  • Kevin Zhong
  • Trang Duncanson
  • Chris Scheuber
  • Jessica Chen
  • Evelyn Njoo 

For general information about the Taskforce please contact Lily Meszaros at Lily.meszaros@actuaries.asn.au

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About the author

Trang Duncanson

Trang Duncanson is a member of the Institute of Actuaries IFRS17 /AASB17 Implementation Taskforce and is leading the member communications work-stream on behalf of this taskforce. She is also the Chief Editor of Actuaries Digital, a member of the Institute’s new Diversity and Inclusion Working Group, and a Partner in Deloitte’s actuarial practice.

Trang Duncanson

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