In interpreting IFRS 17, each business can develop Guidance Notes that are tailored to their specific operations. These Guidance Notes serve as benchmarks or initial guidelines rather than operational manuals. They allow businesses to adapt IFRS 17 principles according to their unique contexts, reflecting the principle-based nature rather than a rigid Rule-based approach.
For example, in a neighboring country like Malaysia, there is an Industry Guidance Note for the non-life insurance sector, spanning approximately 88 pages. This document serves as an interpretation of the over 600-page IFRS 17 standards, adapting it to the broader context of the non-life insurance industry.
Industry Guidance Notes serve as a collective outline of recommended practices for businesses, capturing the general consensus on how operations should be conducted. However, they do not cover every possible scenario, leaving room for companies to interpret and apply the standards in their own unique ways.
Therefore, it's not surprising that each company (especially multinational firms) has its own set of practices, known as a Positioning Paper. This additional document allows them to align with their specific databases, customer segments, product groups, profit management methods, and even future business plans. Even small companies can adapt the Industry Guidance Note into their own Accounting Positioning Paper and Actuarial Methodology Paper.
The industry practices for the insurance sector cover various aspects such as interpreting the framework to define what falls under IFRS 17 standards, grouping contracts, defining coverage periods, categorizing insurance types, defining profit or loss annually, specifying risk definitions and variables for calculations, and determining financial statement disclosures including necessary footnotes.
If categorized for interpretation purposes, these can be explained as follows:
Introduction and Framework
Separation of Insurance Contracts
Combination of Contracts
Contract Boundary
Level of Aggregation
Technical Actuarial Group
Choice of Measurement Model
Contractual Service Margin and Coverage Unit, including Onerous Contract
Discount Rate
Risk Adjustment
Technical Accounting Group
Attributable Insurance Expense
Transition Approach
Technical Reinsurance Group
Display group
Presentation Chart of Account and Disclosure
Accounting Policy Choices
In this first volume of the IFRS 17 Practice and Interpretation for Thai Non-Life Insurance. will cover only Introduction and Framework by outlining the 4 key topics.
Written by Master Tommy (Pichet)
FSA, FIA, FRM, FSAT, MBA, MScFE (Hons), B.Eng (Hons)
All rights reserved for the content of this article. Do not use it for any commercial gain. In addition to receiving permission from ABS company only.
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